margin of safety ratio

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The margin of safety expressed as a percentage of a given level of activity. For example, if the sales level achieved is £500,000 and the sales level breakeven point is £400,000, the margin of safety is £100,000 and the margin of safety ratio will be:(£100,000 × 100)/£500,000 = 20%.

(£100,000 × 100)/£500,000 = 20%.

Subjects: Accounting.

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