margin of safety
What margin of safety means in Business A-Level, as defined for AQA.
Definitions of margin of safety
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Reference: AQA
The gap in units between current output and the break-even point, which tells a manager how far sales can fall before losses start.
Current output minus break-even output, quoted in units or as a per cent of current output, and the number a lender asks about.
Topics that use margin of safety
- Analysing financial performance (AQA A-Level)
- Annex: quantitative skills in business (AQA A-Level)
Related terms
- break-even output
- contribution per unit
- gross profit margin
- qualitative factors
- analysis
- average rate of return
- averages
- axes and scales
Using margin of safety in the exam
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