ECONOMICS

Detailed explanation-1: -Answer and Explanation: The given statement is true. The margin of safety means the excess units produced over and above the breakeven point. The higher the margin of safety (MOS), the lower the risk of losses.

Detailed explanation-2: -In accounting terms, margin of safety is the difference between profitability and breakeven point. A larger margin of safety indicates that a company has a greater buffer before becoming unprofitable, and a smaller margin of safety means the opposite.

Detailed explanation-3: -A high margin of safety indicates the soundness of business i.e., the break-even point is much below the actual sales so that even if there is a fall in sales, there will still be a profit.

Detailed explanation-4: -If the margin of safety increases there will be a fall in the risk factor associated with that activity.

Detailed explanation-5: -Generally speaking, the higher your margin of safety, the better. The value represented by your margin of safety is your buffer against becoming unprofitable, which will vary depending on your business.