margin of safety
The 'margin of safety' is a versatile concept used across various fields to indicate a buffer or cushion that ensures reliability and minimizes risk.
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Definition
C1Finance
(technical)The difference between the intrinsic value of an investment and its market price, acting as a cushion against potential losses.
Example
- Investors look for a margin of safety to minimize risk in their stock purchases.
C1Accounting
(technical)The amount by which actual or projected sales exceed the break-even sales level, indicating the buffer before losses occur.
Example
- The company maintains a healthy margin of safety to ensure profitability even during downturns.
C2Medicine
(technical)The difference between a therapeutic dose of a drug and a dose that could cause toxicity, ensuring patient safety.
Example
- Doctors calculate the margin of safety to avoid prescribing harmful doses.
C2Engineering
(technical)The ratio of a structure's strength to the demands placed on it, providing a buffer against failure.
Example
- Engineers design bridges with a significant margin of safety to withstand unexpected loads.
Similar
Terms that have similar or relatively close meanings to "margin of safety":