ECONOMICS

Detailed explanation-1: -What is Margin of Safety? The margin of safety is the difference between the amount of expected profitability and the break-even point. The margin of safety formula is equal to current sales minus the breakeven point, divided by current sales.

Detailed explanation-2: -The margin of safety is the amount sales can fall before the break-even point (BEP) is reached and the business makes no profit. This calculation also tells a business how many sales it has made over its BEP.

Detailed explanation-3: -The margin of safety is the difference between actual sales and break-even sales, while the degree of operating leverage (DOL) shows how a company’s operating income changes after a percentage change in its sales. Corporate Finance Institute.

Detailed explanation-4: -Margin of Safety is defined as the extra sales over and above the break even sales. This signifies the safer zone for the organization ensuring that there will be no loss to the organization. Example: Selling Price Rs.10 P/U, No. of units sold 1000.

Detailed explanation-5: -The margin of safety is defined as the sales revenue margin by which even if the expected sales revenue falls short and no losses are incurred.