Finance - Margin of safety

Related BrainMass Solutions

• Operating Leverage and Margin of Safety

  596571 Operating Leverage and Margin of Safety Operating Leverage Leverage, as a business term, refers to debt or to the borrowing of funds to finance the purchase of a company's assets.

• Breakeven Calculation

  The margin of safety improves to 54% from 25% and so the new situation actually reduces the business risk.

• Dousmann Company: Compute margin of safety in dollars; margin of safety ratio

  Compute the following (a) the margin of safety in dollars and (b) the margin of safety ratio.

• Margin of safety

  Compute the company's margin of safety as a percentage of its sales Margin of safety percentage = margin of safety in dollars/total budgeted sales Margin of safety percentage = $3,900/(1,000 units x $26) Margin of safety percentage = 0.15 or 15%

• Contribution margin, break-even and margin of safety

  Margin of safety in $ of sales= $21,000 =$105,000 - $84,000. Margin of safety in units= 700 =3,500 - 2,800.

• Margin of safety & Breakeven point

  Margin of safety % Breakeven Point = Fixed Cost/ Contribution Margin Breakeven Point = 8500/(25-15) = 850 units Then Margin of Safety = 1000 - 850 = 150 units Margin of Safety in % = 150/1000 = 15% The solution computes the margin of safety

• Break even point & margin of safety

  What was the company's margin of safety for the most recent period? Margin of safety is the amount by which the curent sales are over the breakeven sales. Margin of safety is 90,000-80,000 = $10,000.

• Margin of Safety Problems

  497930 = 62930 margin of safety The margin of safety is 62,930.

• Margin of Safety Ratio

  $1500000 (c) (1) Margin of safety in dollars: $2000000 - $1500000 = $500000 (Actual Sales-Breakeven sales) (2) Margin of safety ratio: $500000 ÷ $2000000 = 25% Margin of Safety Ratio = (expected sales - breakeven sales) / Actual