ECONOMICS

Detailed explanation-1: -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 (MOS) is the difference between your gross revenue and your break-even point. Your break-even point is where your revenue covers your costs but nothing more. In other words, your business does not make a loss but it doesn’t make a profit either.

Detailed explanation-3: -Break-even Sales = Total Fixed Costs / (Contribution Margin) Contribution Margin = 1-(Variable Costs / Revenues)

Detailed explanation-4: -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-5: -As a financial metric, the margin of safety is equal to the difference between current or forecasted sales and sales at the break-even point. The margin of safety is sometimes reported as a ratio, in which the aforementioned formula is divided by current or forecasted sales to yield a percentage value.