The difference between the level of activity at which an organization breaks even and a given level of activity greater than the breakeven point, especially the forecast level in a breakeven analysis. The margin of safety may be expressed in the same terms as the breakeven point, i.e., sales value, number of units, or percentage of capacity.
The margin of safety ratio is a financial metric used to measure the amount by which sales can drop before a business reaches its break-even point. It is expressed as a percentage of current sales.
A Profit-Volume (PV) Chart, also known as a Profit-Volume graph, visually represents the relationship between a company's profits and its sales volume. It provides valuable insights into the break-even point, the margin of safety, and the dynamics between fixed and variable costs, aiding in decision-making and strategic planning.
