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Definition of

margin of safety

Treasury Management

level of firm's performance above break-even point the difference between the level of activity at which an organization breaks even and the level of activity greater than this point. For example, a margin of safety of $300,000 is achieved when the break-even point is $900,000 and sales reach $1,200,000. This measure can be expressed as a proportion of sales value, as a number of units sold, or as a percentage of capacity.

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Definitions of ’margin of safety’ and meaning of ’margin of safety’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’margin of safety’ and other financial terms with our online QFINANCE Financial Dictionary.

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