The margin of safety is the "cushion," or drop in sales, a company can absorb without incurring a loss.

Name: The margin of safety is the "cushion," or drop in sales, a company can absorb without incurring a loss.
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Question

Quizplus · Accepted Answer

The margin of safety is the amount by which sales or revenues can decline before the company starts incurring losses. It is the cushion that a company has to absorb or withstand a drop in sales or revenues. Therefore, the statement is true.

The Margin of Safety Is the "Cushion," or Drop in Sales