ECONOMICS

Detailed explanation-1: -The margin of safety is a financial ratio that measures the amount of sales that have exceeded the break-even point. This financial ratio indicates the actual profit of the company once it pays for all fixed and variable costs.

Detailed explanation-2: -A higher margin of safety means the company has more protection from a decline in sales. It acts as a buffer so that volatile sales periods are not detrimental to the business. A low margin of safety indicates the company does not have a wide buffer and needs to make some changes.

Detailed explanation-3: -The margin of safety is the amount by which sales can decrease before losses are incurred by the company. The margin of safety percentage is equal to the margin of safety in dollars divided by total contribution margin.

Detailed explanation-4: -In accounting, the margin of safety is the gap between present or estimated future sales and the break-even point. This is the minimum sales level needed to prevent loss from selling the product. By calculating the margin of safety, companies can decide to make adjustments or not based on the information.