the margin of safety is the reduction in sales that can occur before the break-even point is reached. It measures the cushion that a particular level of sales can decline without incurring a loss. Discuss two limitations of relying on a margin of safety when predicting future sales. Is it reliable? Why or why not? Provide support for rationale.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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the margin of safety is the reduction in sales that can occur before the break-even point is reached. It measures the cushion that a particular level of sales can decline without incurring a loss.

Discuss two limitations of relying on a margin of safety when predicting future sales. Is it reliable? Why or why not? Provide support for rationale.

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