The margin of safety ratio is
A) expected sales divided by break-even sales.
B) expected sales less break-even sales.
C) margin of safety in dollars divided by expected sales.
D) margin of safety in dollars divided by break-even sales.

Question

Quizplus · Accepted Answer

The margin of safety ratio is calculated by dividing the margin of safety in dollars by the expected sales. This ratio indicates how much sales can drop before the business reaches its break-even point.

The Margin of Safety Ratio Is