Margin of Safety Percentage v2

$"Margin of Safety Percentage" = "Minimum Labor Cost" /(1-( "Food Cost %" + "Variable Cost %" ))$

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fcp

vcp

Tags

This equation finds the percentage of margin of safety. The margin of safety is a principle of investing in which an investor only purchases securities when the market price is significantly below its intrinsic value. In other words, when market price is significantly below your estimation of the intrinsic value, the difference is the margin of safety. This difference allows an investment to be made with minimal downside risk.

Resource:

Dopson, Lea R., and David K. Hayes. Managerial Accounting for the Hospitality Industry. Hoboken, NJ: Wiley, 2009. Print.
"Margin Of Safety Definition | Investopedia." Investopedia. N.p., 03 Nov. 2005. Web. 08 Aug. 2015.