5. Operations Management

Margin Of Safety — Quiz

Test your understanding of margin of safety with 5 practice questions.

Practice Questions

Question 1

What does margin of safety measure in business?

Question 2

A business has actual sales of $5{,}000$ units and break-even sales of $3{,}500$ units. What is the margin of safety in units?

Question 3

A business has actual sales revenue of $20{,}000$ and break-even sales revenue of $15{,}000$. What is the margin of safety as a percentage of actual sales?

Question 4

What does a high margin of safety usually indicate?

Question 5

If a business's actual sales are exactly equal to its break-even sales, what is the margin of safety?