Sensitivity analysis is used to:

Question

Quizplus · Accepted Answer

Sensitivity analysis involves varying one assumption at a time, while keeping all other factors constant, in order to see its impact on the business plan. This allows the business to identify the most important assumptions and to determine how robust the plan is to changes in these assumptions. Option A refers to scenario analysis, which involves varying multiple assumptions simultaneously. Option B involves predicting outcomes under the most likely set of circumstances, without necessarily testing the impact of varying assumptions. Option D involves forecasting demand specifically in response to changes in interest rates and the economy, which is a different type of analysis from sensitivity analysis.

Sensitivity Analysis Is Used To