Application To Accounting
In investing parlance, margin of safety is the difference between the expected (or actual) sales level and the breakeven sales level. It can be expressed in the equation form as follows:
Margin of Safety = Expected (or) Actual Sales Level (quantity or dollar amount) - Breakeven sales Level (quantity or dollar amount)
The measure is especially useful in situations where large portions of a company's sales are at risk, such as when they are tied up in a single customer contract that may be canceled.
Read more about this topic: Margin Of Safety (financial)
Famous quotes containing the words application to, application and/or accounting:
“If you would be a favourite of your king, address yourself to his weaknesses. An application to his reason will seldom prove very successful.”
—Philip Dormer Stanhope, 4th Earl Chesterfield (1694–1773)
“We will not be imposed upon by this vast application of forces. We believe that most things will have to be accomplished still by the application called Industry. We are rather pleased, after all, to consider the small private, but both constant and accumulated, force which stands behind every spade in the field. This it is that makes the valleys shine, and the deserts really bloom.”
—Henry David Thoreau (1817–1862)
“I, who am king of the matter I treat, and who owe an accounting for it to no one, do not for all that believe myself in all I write. I often hazard sallies of my mind which I mistrust.”
—Michel de Montaigne (1533–1592)