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View Full Version : Can the margin of safety ever be negative?


ktdanielson
May 16, 2010, 08:47 AM
In what situation is the margin of safety going to be negative?

morgaine300
May 20, 2010, 09:54 PM
Look at your equation for it:

Actual sales (or budgeted sales) - break even sales.

Now what would make that negative?

ktdanielson
May 21, 2010, 12:53 AM
If sales fall below break even then margin of safety would be negative?

morgaine300
May 23, 2010, 10:17 PM
Yup. Also known as a loss. :-)

acc_tutor
Jan 21, 2013, 03:30 PM
This concept is not about profit or loss! Profit or loss is not calculated by deducting one type of sales from another type of sales.