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Loading the player... Margin of safety is a principle of investing in which an investor only purchases securities when the market price is significantly below its intrinsic value. In other words, when market price is significantly below your estimation of the intrinsic value, the difference is the margin of safety.
21,816 units The margin of safety as a percentage of sales is Solution: Margin of safety in dollars: Current sales = $200 per unit Ã 30,300 = $6,060,000 Break even sales = $200 per unit Ã 21,816 = $4,363,200 Margin of safety in dollars = Sales - Break-even sales = $6,060,000 - $4,363,200 = $1,696,800 Margin of safety as a percentage of sales = Margin of safety in dollars Ã· Current sales = $1,696,800 Ã· $6,060,000 = 28% (rounded) 43.