The Margin of Safety Tells Managers

question 29

Multiple Choice

The margin of safety tells managers:

• A)how much sales would have to increase to hit the target profit.
• B)how much profit would drop if sales decreased.
• C)how much sales could drop before the firm no longer earns profits.
• D)how much profit would have to increase to hit target sales.

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Definitions:

Scarce Resources

Goods or services that are limited in availability relative to the desires or needs of individuals or systems.

Competition

A situation where two or more parties strive for a goal that cannot be shared, such as a higher rank or prize.

Arteries Constricting

Arteries constricting refers to the narrowing of the arteries, which can reduce blood flow and increase blood pressure.

Heart Rate

The number of heartbeats per unit of time, typically expressed as beats per minute (bpm).