Mark, a new business owner, creates two cash flow statements for his firm.The first increases the monthly revenue of his firm by 40 percent, while the other reduces the monthly revenue by 40 percent.He compares the effect of each scenario on his firm's business to understand its financial situation.In this scenario, Mark is developing a ________.

Question

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Mark is performing a sensitivity analysis, which involves changing certain variables (in this case, revenue) to see the effect on the business's financial situation. A gap analysis compares actual performance to desired performance, a balance sheet shows the assets, liabilities, and equity of a business at a specific point in time, and a break-even analysis calculates the level of sales needed to cover expenses.

Mark, a New Business Owner, Creates Two Cash Flow Statements