Margin Safety Calculation

Margin of Safety Calculator

Margin Safety Calculation

Margin  Of Safety between an Investments intrinsic value  and its Market value. Investors try to buy assets at price lower than intrinsic value. Margin of Safety dollars , Ratio , Percentage (%), and Units included to current or estimated sales and break even sales.Margin Of Safety Calculators equal to Current (estimated) sales less than Break even point.

Formula as,

Margin of Safety in dollars = Current (estimated)sales-Break even Point

Let us considers,

Current (estimated)Sales is the break even point from the current or estimated sales.

Break even point as a ratio or percentage or as sales in monetary terms or units still break even.

1.)Margin Of Safety (Ratio)

The Margin of Safety (ratio) equal to Current Estimated sales than Break even Point divided to current estimated.

Formula as,

Margin of Safety (Ratio)=Current Estimated sales – Break even point /Current Estimated

Example for ,

Current Estimated Sales (70,000),Break Even point (40000), Current Estimated (70000)

Margin Of Safety (ratio)=70,000-40000/70,000

The answer is Margin Of Safety Ratio- 0.42

2)Margin Safety Dollars

The Margin Safety Dollars equal to Current estimated sales less than break even point.

Formula as

Margin Safety Dollars= Current Estimated Sales-Break Even point

Let us considers,

Current Estimated Sales( 70000), Break Even Point(40000)

Example For,

Margin Safety Dollars= 70000-40000

The answer is Margin Safety Dollars = 30000$

3.) Margin of Safety Percentage

The Margin Of safety Percentage (%) Equal to Current Estimated sales less than break even point divided to current  estimated Sales Multiple  100 numbers value.

Formula as

Margin Safety (%)=Current (estimated)Sales-Break even Point /Current Estimated Sales *100

Let us Consider,

Current Estimated Sales (70000), Break Even Point (40000),Current Estimated Sales (70000),100 number value,

Margin Safety(%)=70000-40000-/70000*100

The Answer is Margin Safety (%)42.85%

4.)Margin Of Safety In Units

The Margin Of Safety units Equal to Current Estimated sales less than break even point  Divided sales price per units.

Formula As,

Margin of Safety(units)=Current Estimated sales-Break Even points /Sales price per units

Example for,

Margin of Safety (units)=70000-40000/400

The answer is Margin Safety(units)=69,900

5)Current (or) Estimated Sales

The Current Or Estimated sales equal to sales volume  multiple selling price per unit.

Formula as,

Current Or Estimated sales = Sales Volume*Selling price per unit

Let us consider,

Sales volume (400000),selling price per unit(300),cost per unit(300$)

Example For,

Current or Estimated sales=40000*300

The answer is Current or estimated =1,2000,000$

6)Break even sales

The break even sales equal to sales volume multiple cost price per unit.

The formula as,

Break even sales = sales volume* Cost per unit

Example for,

Break even sales=400000*300$

The answer is Break even 120,000,000$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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