Overview

The margin of safety measures the difference between the actual sales of company and its breakeven point. The formula for calculating the margin of safety is as follows:

Margin of Safety = (Current Sales Level - Breakeven Point) / Current Sales Level x 100

This formula can be expressed in either dollar amounts or number of units:

Margin of Safety (in dollars) = Current Sales - Breakeven Sales

Margin of Safety (in units) = Current Sales Units - Breakeven Units

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