If Fixed Costs Go Up and All Other Factors Remain

question 78

True/False

If fixed costs go up and all other factors remain the same, the margin of safety will become smaller.

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Definitions:

Issued Shares

The number of shares that have been allocated to be sold and are held by shareholders, including both public investors and company officers or insiders.

Treasury Shares

Stocks that were issued and later reacquired by the issuing company, reducing the amount of outstanding stock on the open market.

Contributed Surplus

An account on the shareholders' equity section of the balance sheet that represents the excess amount investors paid over the par value of the shares.

Retained Earnings

Accumulated net incomes of a company not paid out as dividends but retained for reinvestment in the business or to pay off debts.