Margin Of Safety.

Q77. What is margin of safety? How it can be improved?
Ans. The margin of safety represents the difference between the sales and Break Even Point. The size of margin of safety shows the strength of the business.

It can be improved as follows:

  1. Increase in selling price.
  2. Reduction in fixed expenses.
  3. Reduction in variable expenses.
  4. Increase in sales volume.