BANKING AFFAIRS

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 a financial ratio that measures the amount of sales that have exceeded the break-even point. This financial ratio indicates the actual profit of the company once it pays for all fixed and variable costs.

Detailed explanation-3: -Margin of safety is a principle of investing in which an investor only purchases securities when their market price is significantly below their intrinsic value. In other words, when the market price of a security is significantly below your estimation of its intrinsic value, the difference is the margin of safety.

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: -The breakeven point is that point where total revenue equals total costs or expenses. The point represents the level of sales where the business makes neither a profit nor a loss. Additional sales beyond this point will result in profits.