Which of the following best describes the term sensitivity analysis?
A) Evaluating a company's financial condition by doing financial statement ratio analysis
B) An analysis of the emotional sensitivity of a company's employees
C) Testing data to determine how results would differ if key assumptions are changed
D) An evaluation of the accuracy of the data's assumptions

Question

Quizplus · Accepted Answer

Sensitivity analysis involves testing data to determine how results would differ if key assumptions are changed. This helps to understand how sensitive a model or system is to different assumptions and can help in decision making. Option A is describing financial ratio analysis, Option B is describing emotional intelligence analysis and Option D is describing accuracy evaluation, which are not the best descriptions of sensitivity analysis.

Which of the Following Best Describes the Term Sensitivity Analysis