This margin of safety template will allow you to calculate the margin of safety given the profits and break-even point.
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The margin of safety is the difference between the amount of expected profitability and the break-even point. The margin of safety formula is equal to current sales minus the break-even point divided by current sales.
In accounting, the margin of safety is calculated by subtracting the break-even point amount from the actual or budgeted sales and then dividing by sales; the result is expressed as a percentage.
Margin of safety = (Current sales level – break-even point) / Current sales level X 100
The margin of safety formula can also be expressed in dollar amounts and number of units:
Margin of safety in dollars = Current sales – Break-even sales
Margin of safety in units = Current sales units – Break-even point
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