What is Margin of Safety?
Margin of safety measures how much sales can fall before a business reaches its break-even point and starts losing money. A larger margin of safety means more cushion against a sales downturn.
The Formula
Margin of Safety ($) = Actual Sales – Break-Even Sales. Margin of Safety (%) = (Margin of Safety ÷ Actual Sales) × 100.
Note: This tool is for general business planning and educational purposes only.
Last reviewed August 2026