Question

under which case the margin of safety decreases​

Answer 1

Margin of Safety is the number of units or the percentage of sales exceeding the break-even point. It is a safety cushion that protects a business against a loss. Higher the Margin of Safety, lower the risk of making loss whereas lower the Margin of Safety, greater the risk of doing business.

Answer 2

Introduction:

The margin of safety shows the firm how much money they can lose in sales before they start losing money, or before they go below the break-even point.

Explanation:

The number of units or percentage of sales that surpass the break-even mark is referred to as the margin of safety. It is a safety net that protects a company from a loss. The bigger the Margin of Safety, the lesser the chance of loss; the lower the Margin of Safety, the greater the risk of conducting business.

When there is a loss, the margin of safety shrinks.