Question

The margin of safety ratio is equal to the margin of safety in dollars divided by the actual or (expected) sales

a. True
b. False

Answer 1

The margin of safety ratio is equal to the margin of safety in dollars divided by the actual or (expected) sales.

Step-by-step explanation:

The margin of safety ratio is equal to the margin of safety in dollars divided by the actual or (expected) sales.

To calculate the margin of safety ratio, you need to know the margin of safety in dollars and the actual or expected sales. Divide the margin of safety in dollars by the actual or expected sales to find the margin of safety ratio.

For example, if the margin of safety in dollars is $10,000 and the actual or expected sales are $50,000, the margin of safety ratio would be 0.2 or 20%.