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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DEPRECIATED HISTORICAL COST (DHC) is the method of valuation of certain assets at the actual cost of their acquisition and subsequent enhancement less a reduction for depreciation to date.

OPERATING ASSETS are long-term, or non-current, assets acquired for use in the business rather than for resale; includes property, plant, and equipment; intangible assets; and natural resources.

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