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    ktdanielson's Avatar
    ktdanielson Posts: 16, Reputation: 1
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    #1

    May 16, 2010, 08:47 AM
    Can the margin of safety ever be negative?
    In what situation is the margin of safety going to be negative?
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    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's Avatar
    ktdanielson Posts: 16, Reputation: 1
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    #3

    May 21, 2010, 12:53 AM
    If sales fall below break even then margin of safety would be negative?
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #4

    May 23, 2010, 10:17 PM

    Yup. Also known as a loss. :-)
    acc_tutor's Avatar
    acc_tutor Posts: 1, Reputation: 1
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    #5

    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.
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