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Margin of Safety

The difference between the actual level of output and the breakeven output.

Margin of safety is a concept in financial analysis that measures the difference between the actual earnings of a company and the break-even point. The break-even point is the point where a company's revenues are equal to its expenses, and it's not making a profit or a loss.

The margin of safety is the buffer between the actual earnings and the break-even point, and it provides a cushion against unexpected events or changes in the market. It's a way of measuring a company's resilience and ability to withstand shocks or downturns. The higher the margin of safety, the more financially stable a company is considered to be.

Margin of safety is an important consideration for investors when analyzing a company's financial health and future prospects.

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