MaintenanceMarginCalculator

What is Maintenance Margin?

Maintenance margin is a financial metric that indicates the cushion a company has against potential losses. It is calculated as the ratio of net assets (Total Assets - Total Liabilities) to total assets. A higher maintenance margin indicates a stronger financial position and greater resilience to withstand losses.

How to Use This Calculator

1. Enter the total assets of the company in the "Total Assets" field.
2. Enter the total liabilities of the company in the "Total Liabilities" field.
3. Click the "Calculate" button to compute the maintenance margin.
4. The result will be displayed as a decimal and can be converted to a percentage by multiplying by 100.

Interpreting the Results

The maintenance margin result ranges from 0 to 1 (or 0% to 100%).

• A maintenance margin of 1 (or 100%) means the company has no liabilities and is fully capitalized by its assets.
• A maintenance margin greater than 0.5 (or 50%) is generally considered healthy, indicating a strong financial position.
• A maintenance margin below 0.2 (or 20%) may indicate financial risk and potential insolvency.

Example

For example, if a company has total assets of $500,000 and total liabilities of $200,000:

Maintenance Margin = ($500,000 - $200,000) / $500,000 = $300,000 / $500,000 = 0.6 (or 60%)

This means the company has a 60% cushion against potential losses.