The amount by which a company's sales can decline before losses are incurred is called the:
A)contribution margin ratio.
B)degree of operating leverage.
C)margin of safety.
D)contribution margin.

Question

Quizplus · Accepted Answer

Margin of safety is the amount by which actual or projected sales exceed the break-even sales level. It indicates the buffer that a company has before it starts incurring losses. A higher margin of safety indicates a more flexible or resilient company, while a lower margin of safety indicates greater exposure to losses.

The Amount by Which a Company's Sales Can Decline Before