Margin of Safety
Margin of safety represents the strength of the business. It enables a business to know what is the exact amount it has gained or lost and whether they are over or below the break even point.
margin of safety = (current output - breakeven output)
margin of safety% = (current output - breakeven output)/current output × 100
When dealing with budgets you would instead replace "Current output" with "Budgeted output".
If P/V ratio is given then profit/ PV ratio
Read more about this topic: Break-even (economics)
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