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
Value marginal productValue marginal product
Marginal value product.
Dumping marginDumping margin
In a case of dumping, the difference between the "fair price" and the price charged for export. Used as the basis for setting anti-dumping duties.
Net profit marginNet profit margin
Net income divided by sales; the amount of each sales dollar left over after all expenses have been paid.
Margin securitiesMargin securities
Securities which may be bought or sold on margin. In the USA, an approved list of margin securities is published by the Federal Reserve Board.
Marginal revenueMarginal revenue
The change in total revenue as a result of producing one additional unit of output.
Further Suggestionsmarginal tax rate
Marginal rate of substitution
Initial margin requirement
Marginal rate of transformation
Marginal propensity to import
Effective margin (EM)
Marginal tax rate
Marginal propensity to consume
Margin account (stocks)
Buy on margin