[amp_mcq option1=”Profit volume ratio\/profit” option2=”Sales-profit\/profit volume ratio” option3=”P\/V ratio\/Fixed cost + desired profit” option4=”Sales\/profit volume ratio E. Profit\/profit volume ratio” correct=”option2″]<\/p>\n
The correct answer is: B. Sales-profit\/profit volume ratio<\/strong>.<\/p>\n Marginal safety is the amount of sales that a company can lose before it starts to incur a loss. It is calculated by dividing sales by the profit-volume ratio. The profit-volume ratio is the ratio of profit to sales. It is calculated by dividing profit by sales.<\/p>\n The other options are incorrect because they do not measure marginal safety. Option A, profit volume ratio\/profit, is the profit-volume ratio. Option C, P\/V ratio\/Fixed cost + desired profit, is the break-even point. Option D, Sales\/profit volume ratio, is the sales-to-profit ratio. Option E, Profit\/profit volume ratio, is the profit margin.<\/p>\n Marginal safety is an important measure for businesses because it indicates how much sales can decline before the company starts to lose money. This information can be used to make decisions about pricing, production, and marketing.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”Profit volume ratio\/profit” option2=”Sales-profit\/profit volume ratio” option3=”P\/V ratio\/Fixed cost + desired profit” option4=”Sales\/profit volume ratio E. Profit\/profit volume ratio” correct=”option2″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-48837","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"\n