Work out margin of safety (sales) instantly with clear inputs, formula shown and shareable results.
Margin of safety is the cushion between current sales and the break-even point. Expressed as a percentage it tells you how far revenue can fall before the business starts making a loss, which is the single most useful sensitivity figure for an operating plan.
Margin of safety
Margin of safety = Actual sales - Break-even sales
As a percentage
MoS % = (Actual sales - Break-even sales) / Actual sales x 100
Above roughly 30% is comfortable for most trading businesses; below 10% means a small demand shock pushes you into losses and fixed costs need attention.
Yes. The same subtraction works on units, and the percentage is identical provided selling price is constant across the range.