Cost Volume Profit Analysis - Margin of Safety Analysis

The video tutorial explains the concept of margin of safety, a critical business metric that indicates how much sales can drop before a company incurs losses. It covers the calculation of margin of safety in units and dollars, using an example to illustrate the process. The tutorial emphasizes the importance of context in interpreting the margin of safety, comparing different product types. It also introduces the margin of safety ratio, which expresses the margin as a percentage, providing a more universal measure across different products.

Explain the difference between current sales and projected sales in the context of margin of safety.

How does the margin of safety ratio provide additional insight compared to the margin of safety alone?