determine margin of safety if profit is rs 18000and PV ratio is 50,,%
Answer (1)
21st Oct, 2020
The margin of safety is the difference between the total sales and break-even sales. It may be expressed in monetary terms or as a percentage, i.e., the margin of safety in relation to total sales. It is an extremely valuable guide and indicates the financial strength of the business.
Margin of safety = profit / PV ratio
So according to your quoted details-
Margin of safety = 18000/50
= 360
Which is desired answer.
I hope this helps.
Regards
Madhur
Margin of safety = profit / PV ratio
So according to your quoted details-
Margin of safety = 18000/50
= 360
Which is desired answer.
I hope this helps.
Regards
Madhur
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