100% x 90

Margin of Safety Calculator

Calculate margin of safety for investments and business operations to assess financial risk

Calculate Margin of Safety

Currency

Calculation Method

Current (Estimated) Sales ($)

Breakeven Sales ($)

Margin of Safety Results

Enter values to calculate

Fill in the required fields to see your margin of safety results

Risk Analysis

Example Calculation

Business Example

Company: Baggies Enterprise

Current Sales: $80,000

Breakeven Sales: $50,000

Calculation

Margin of Safety = $80,000 - $50,000

Margin of Safety = $30,000

Safety Percentage = ($30,000 ÷ $80,000) × 100 = 37.5%

100% x 250

Risk Assessment Levels

30%+ (Low Risk)

Excellent safety buffer

20-30% (Moderate Risk)

Good protection level

10-20% (High Risk)

Limited safety margin

<10% (Very High Risk)

Dangerous proximity to breakeven

Improving Safety Margin

Increase Revenue

• Raise selling prices
• Increase sales volume
• Improve product mix
• Expand market reach

Reduce Costs

• Lower production costs
• Negotiate better supplier terms
• Improve operational efficiency
• Reduce fixed expenses

What is Margin of Safety?

The margin of safety is a crucial financial metric that measures the difference between actual or estimated sales and the breakeven point. Originally coined by investors Benjamin Graham and David Dodd, this concept helps assess the risk level of investments and business operations.

In Business Operations

Measures how much sales can decline before a business becomes unprofitable. A higher margin indicates greater protection against unexpected downturns or expenses.

In Investment Analysis

Represents the gap between an asset's intrinsic value and its market price. Investors seek assets priced below their intrinsic value to create a safety buffer.

Margin of Safety Formulas

1. Margin of Safety in Dollars

Margin of Safety = Current Sales - Breakeven Sales

2. Margin of Safety Ratio

Safety Ratio = (Current Sales - Breakeven) / Current Sales

3. Margin of Safety Percentage

Safety % = [(Current Sales - Breakeven) / Current Sales] × 100

4. Margin of Safety in Units

Safety Units = Margin of Safety $ / Price per Unit