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.

Question

Quizplus · Accepted Answer

The margin of safety ratio indicates what percent decline in sales could be sustained before the company would operate at a loss.

The Margin of Safety Ratio