MARGIN OF SAFETY Definition

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MARGIN OF SAFETY, in accounting, is how much output or sales level can fall before a business starts making a loss. In investing, it is the difference between the intrinsic value of a stock, i.e. value based on stock valuation and what the company is actually worth and the price that the market sets on a stock, i.e. a stock price is a matter of the market participants opinions.

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IMPREST BASIS, in cash accounts, means that the exact amount of fund expenditures is replaced periodically.

COOKIE JAR RESERVES is an overly aggressive accrual of operating expenses and the creation of liability accounts done in an effort to reduce future year operating expenses.

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