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  • Budgeting Book 2

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    Mackay Family
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    This document discusses key metrics for evaluating the financial performance and risk of a company: margin of safety (MOS), which measures actual sales revenue over the breakeven point; MOS can also be expressed as a percentage of sales. The MOS ratio is calculated as current sales minus breakeven sales divided by current sales. The document also defines the indifference point as the point where profits are the same between two alternatives when total costs and revenues are equal.

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    This document discusses key metrics for evaluating the financial performance and risk of a company: margin of safety (MOS), which measures actual sales revenue over the breakeven point; MOS can also be expressed as a percentage of sales. The MOS ratio is calculated as current sales minus breakeven sales divided by current sales. The document also defines the indifference point as the point where profits are the same between two alternatives when total costs and revenues are equal.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    9 views1 page

    Budgeting Book 2

    Uploaded by

    Mackay Family
    This document discusses key metrics for evaluating the financial performance and risk of a company: margin of safety (MOS), which measures actual sales revenue over the breakeven point; MOS can also be expressed as a percentage of sales. The MOS ratio is calculated as current sales minus breakeven sales divided by current sales. The document also defines the indifference point as the point where profits are the same between two alternatives when total costs and revenues are equal.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 1

    Margin of Safety

    MOS = (Actual / Budgeted) SR - BEP in sales

    ♥ can also be expressed as a % of sales


    MOS % = [(Actual/Budgeted) SR - BEPs] / (Actual/Budgeted) SR

    MOS Ratio
    MOS% = (Current Sales - Breakeven Sales) / Current Sales

    Indifference Point
    Sra - TVCa - TFCa = SRb - TVCb - TFCb

    TCMa - TFCa = TCMb - TFCb

    UCMa * SU - TFCa = UCMb * SU - TFCb

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