Company A has a higher margin of safety while Company B has a lower margin of safety. Company A would be considered ________ Company B when considering only margin of safety.

Question

Quizplus · Accepted Answer

A higher margin of safety means the company has a larger buffer or cushion before it starts losing money, which makes it less risky. On the other hand, a lower margin of safety indicates that the company has a smaller buffer and is more vulnerable to losses, which makes it riskier. Therefore, Company A is less risky than Company B based on margin of safety.

Company a Has a Higher Margin of Safety While Company