15-12-1

Margin of Safety

15-12 Margin of Safety

Margin of Safety lets you calculate how much sales can be reduced before losses are incurred.

Margin of Safety Fields

The following fields appear on the Margin of Safety calculation page.

Field

Description

SAL

Amount obtained from sales

SBE

Break-even sales (amount that must be obtained from sales to break even)

MOS

Margin of safety (portion of sales amount above break-even point)

kExample

What is the margin of safety ([MOS]) when the sales amount ([SAL]) is $1,200,000 and the break-even sales amount ([SBE]) is $1,000,000?

•You can calculate the break-even sales amount ([SBE]) using Break-Even Point (page 15-11-1).

•You can also calculate the sales amount ([SAL]) or break-even sales amount ([SBE]) by inputting the other two values and tapping the button for the result you want.

Calculation Formulas

MOS = SAL – SBE

SAL

20060301