Which Statement Relating to Margin of Safety Is Not True

question 17

Multiple Choice

Which statement relating to margin of safety is not true?

• A)It is an important extension of break-even analysis
• B)It is the excess of actual sales over expected sales
• C)A large margin of safety indicates that a business can absorb a significant decline in sales volume
• D)It is the amount by which sales can decrease before a loss occurs

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Definitions:

Enterprise

A business or company, especially one that's large and complex, engaged in commercial or professional activities.

Financial Statements

Reports that provide an overview of a company's financial condition, including balance sheets, income statements, and cash flow statements.

Marketing Function

The role within a company involved with identifying and meeting the needs and wants of customers through product development, pricing, promotion, and distribution.

Generating Demand

Generating Demand involves creating interest or desire for a product or service through marketing strategies, initiatives, and activities, aiming to increase sales and market presence.