The Margin of Safety Calculator
If you want to find the sales amount that transcends your business's breakeven point, then the margin of the safety calculator is made for you.
The variation between the breakeven point and the actual or estimated sales is known as the MOS (Margin of Safety). Moreover, Benjamin Graham and David Dodd invented it to find the difference between an investment's essential/intrinsic value and its value in the market.
The breakeven point is the point where total expenses in business and total income from business are equivalent. In simple words, if the company has made no profit and no loss, then it is called the breakeven point or is also known as breakeven sales.
Table of Contents
Formula of the Margin of Safety Calculator
You can find the MOS in various ways like percentage, ratio, financial/monetary terms, or units. We will discuss and narrate all possible ways here:
1. MOS in dollars
MOS = current sales – breakeven point
2. MOS ratio
MOS (ratio) = current sales – breakeven point / current sales
3. MOS in percentage
MOS (%) = [current sales – breakeven point / current sales] * 100
4. MOS in units
MOS (units) = current sales – breakeven point / sales price per unit
Note:
To know about EBIT, you can use our EBIT Calculator.
Example
For a more clear and precise understanding, let's solve the example below.
Suppose John’s International made an $80,000 sale in February 2021 and $50,000 is the breakeven sales. Find the margin of safety by using the above formulas.
Given data
Current sales = $80,000
Breakeven point/sales = $50,000
To Find
MOS (Margin Of Safety) = ?
Solution
1. MOS in dollars
MOS = current sales – breakeven point= $80,000 - $50,000 = $30,000
2. MOS ratio
MOS (ratio) = current sales – breakeven point / current sales= 80,000 - 50,000 / 80,000 = 0.375
3. MOS in percentage
MOS (%) = [current sales – breakeven point / current sales] * 100 = 0.375*100 = 37.5%
How to use the Margin of Safety Calculator?
The steps to use the margin of safety calculator are as follows:
Step 1: Enter the value of current (estimated) sales in the first required input.
Step 2: Enter the value of breakeven sales in the second required input.
Step 3: The calculator will automatically display an answer on the screen.
Calculator use
You can use our Margin of Safety Calculator by just simply adding the required values; after that, our free online calculator will display the answer on the screen.
