Margin of Safety Calculator: Assess Your Business’s Financial Cushion
The margin of safety shows how far your current sales can fall before you hit break-even. Calculate it by subtracting break-even sales from current sales, dividing by current sales, and multiplying by 100. For example, if your sales are $500 000 and break-even is $400 000, your cushion is 20 %—sales could drop one-fifth before losses appear (Investopedia, 2023).
Margin of Safety Calculator
Result:
★ Add to Home Screen
×
Follow these steps:
Tap the Share button at the bottom of the browser
Scroll down and tap “Add to Home Screen”
Tap “Add” to confirm
Follow these steps:
Tap the menu icon (⋮) in the top right
Tap “Add to Home screen”
Tap “Add” to confirm
Follow these steps:
Click the menu icon (⋮) in the top right
Click “Bookmarks”
Click “Bookmark this tab” or press Ctrl+D (Cmd+D on Mac)
Is this tool helpful?
Thanks for your feedback!
How to use the tool
Enter Current Sales. Type your latest revenue, e.g., 250000 or 675432.75.
Enter Break-Even Sales. Add the sales level that covers all costs, e.g., 180000 or 512300.40.
Press “Calculate.” The tool returns your margin of safety as a percentage.
Interpret the result. A higher percentage means a wider financial cushion against downturns.
The margin of safety is the percentage distance between your current sales and the break-even point. It quantifies how much revenue can fall before losses start (Investopedia, 2023).
How does the calculator work?
You enter current sales and break-even sales; the script applies $$\frac{\text{Sales} – \text{Break-Even}}{\text{Sales}}\times100$$ to return a precise percentage (AccountingTools, 2022).
What is a healthy margin of safety?
Consultants consider 20 % or more healthy for most SMEs, while capital-intensive sectors may target 30 %+ (KPMG Working Capital Survey, 2021).
How often should I recalculate the margin?
Update it at least quarterly or whenever fixed or variable costs change significantly (SBA, 2022).
What if my margin of safety is negative?
A negative value means sales have not yet reached break-even, signalling immediate cost cuts or revenue growth is required (Horngren, 2021).
How can I widen my margin?
Increase sales through pricing or volume, or reduce break-even by trimming fixed costs and renegotiating variable expenses (Harvard Business Review, 2021).
Does industry affect target margins?
Yes. Software firms can run safely at 15 %, whereas grocery retailers seek 5–10 % due to thin mark-ups (McKinsey Retail Benchmark, 2022).
Why do investors look at this metric?
Investors view a strong margin as evidence of resilience; a 10-point increase can cut perceived risk by one-third in valuation models (PitchBook, 2023).
Important Disclaimer
The calculations, results, and content provided by our tools are not guaranteed to be accurate, complete, or reliable. Users are responsible for verifying and interpreting the results. Our content and tools may contain errors, biases, or inconsistencies. We reserve the right to save inputs and outputs from our tools for the purposes of error debugging, bias identification, and performance improvement. External companies providing AI models used in our tools may also save and process data in accordance with their own policies. By using our tools, you consent to this data collection and processing. We reserve the right to limit the usage of our tools based on current usability factors. By using our tools, you acknowledge that you have read, understood, and agreed to this disclaimer. You accept the inherent risks and limitations associated with the use of our tools and services.
