The margin of safety allows firms to evaluate risk by considering the amount by which expected sales exceeds breakeven sales.

Name: The margin of safety allows firms to evaluate risk by considering the amount by which expected sales exceeds breakeven sales.
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Question

Quizplus · Accepted Answer

The margin of safety is defined as the difference between expected sales and breakeven sales, and it is a measure of the amount by which sales can decline before the company incurs losses. It helps firms evaluate and manage risk.

The Margin of Safety Allows Firms to Evaluate Risk by Considering