The Margin of Safety Ratio

question 114

Multiple Choice

The margin of safety ratio

• A) is computed as actual sales divided by break-even sales.
• B) indicates what percent decline in sales could be sustained before the company would operate at a loss.
• C) measures the ratio of fixed costs to variable costs.
• D) is used to determine the break-even point.

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Definitions:

Subsequent Purchasers

Individuals or entities who buy goods or property after the first or original sale.

Client Engagement

Client engagement refers to the activities and strategies used by an organization to maintain and enhance the relationship with its clients.

Duty of Care

A legal obligation imposed on an individual requiring that they adhere to a standard of reasonable care while performing any acts that could foreseeably harm others.