Margin of safety
Margin of safetyThe term given by Benjamin Graham, 'the father of value investing', to the idea that if you buy shares for less than two thirds of their net asset value, you automatically have a cushion against any deterioration in the company's trading position in the future. Put another way, 'buy cheap'.Graham's view was that it is extremely difficult to accurately predict a company's future earnings. For an investment to be 'safe', therefore, he liked to see a margin between the value of its net current assets and its share price. If the share price was below the net current assets divided by the number of shares in issue, he would consider buying it.One of the problems with Graham's approach is that in bull markets it is very difficult to find companies that fulfil his criteria. A second problem is that many of the fastest growing companies in modern economies are those whose assets are intangible - for instance, the value of their intellectual property. Under the Graham rubric, these sorts of assets would be excluded.
Margin of safetyWith respect to working capital management, the difference between (1) the amount of long-term financing and (2) the sum of fixed assets and the permanent component of current assets.
Margin of safety
Marginal tax rateMarginal tax rate
The tax rate that would have to be paid on any additional dollars of taxable income earned.
Marginal rate of transformationMarginal rate of transformation
The increase in output of one good made possible by a one-unit decrease in the output of another, given the technology and factor endowments of a country; thus the absolute value of the slope of the transformation curve.
Marginal revenueMarginal revenue
The change in total revenue as a result of producing one additional unit of output.
Marginal propensity to saveMarginal propensity to save
The fraction of a change in income (or perhaps disposable income) that is saved.
Unmargined accountUnmargined account
A cash account held at a brokerage firm.
Margin account (stocks)
Buy on margin
Net profit margin
Marginal value product
Value marginal product
Gross profit margin
Marginal propensity to consume
Marginal propensity to import
Effective margin (EM)
marginal tax rate