The margin of safety can be defined as the amount by which sales can decrease before losses are incurred by the company.

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The margin of safety is the measure of the ability of a company to withstand a decrease in sales before it starts incurring losses. It is calculated by subtracting the breakeven point (the level of sales where the company neither makes a profit nor loss) from the actual sales. The resulting figure represents the amount of sales that a company can afford to lose before it starts making losses. A higher margin of safety indicates that the company is better equipped to handle changes in the market, unexpected events, and other challenges. It is an essential metric for companies to understand their financial health and make informed business decisions.

The Margin of Safety Can Be Defined as the Amount