sensitivity analysis


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Sensitivity analysis

Analysis of the effect on a project'sprofitability of changes in sales, cost, and so on.

Sensitivity Analysis

The analysis of an investment's profitability according to various changes. That is, sensitivity analysis considers potential changes to interest rates, costs, and/or other variables and measures how this will affect the return on the investment. Sensitivity analysis is a form of quantitative research. It can be useful in making investment decisions. It is sometimes called a what-if analysis. See also: Volatility.

sensitivity analysis

a means of testing the extent to which the results of an analysis of an INVESTMENT project or company budget would change if one or more of the assumptions on which the analysis is based were to change. For example, in estimating the rate of return on an investment, such as a new machine, a firm will need to input various assumptions about the cost of the machine, the anticipated life of the machine, its running costs, annual output, residual value etc. Sensitivity analysis shows how much the expected rate of return on the machine would change if any one of these factors were to be higher or lower than originally expected. Sensitivity analysis thus allows managers to anticipate a range of possible outcomes where uncertainty about the factors involved make it impossible to predict the exact outcome. See UNCERTAINTY AND RISK, DISCOUNTED CASH FLOW.

sensitivity analysis

Use of spreadsheets to analyze an income-producing property or a development project, and then changing key assumptions in order to view the changes this causes. The creation of a best-case,worst-case,and most-likely-case pro forma is one type of sensitivity analysis.

References in periodicals archive ?
Pennsylvania phosphorus (P) index input variable conditions found in the biosolids 95-field study and used in the nominal range sensitivity analysis (NRSA).
Any institution embarking on price sensitivity analysis has to begin by ensuring integrity and completeness of admissions and financial aid records.
We analyzed both of our models with uncertainty and sensitivity analysis based on Monte Carlo methods (17-20) (see Appendix for farther details) to quantify the effect of vaccine efficacy, duration of vaccine-induced immunity, and vaccination coverage rates on the cumulative percentage of infections and TB cases prevented.
Sensitivity analysis reveals that only an extremely severe influenza epidemic could account for the majority of the excess deaths for this time period.
Multiple consolidation scenarios can be generated and sensitivity analysis done--within just minutes--to develop an optimization plan that prioritizes how the enterprise should execute its infrastructure consolidation initiatives.
It has also added three new analysis-Goal Seek, Stress Analysis, and advanced Sensitivity Analysis.
Staffing model sensitivity analysis (by staffing ratio recommendations) BASE CASE SCENARIO 1 SCENARIO 2 SCENARIO 3 CNA hours 2.
The system provides high sensitivity analysis for use in the polymers, materials analysis and packaging industries.
Explains Okura, "Then the response surface equation is generated for each design factor automatically, which is used for the optimization, reanalysis, sensitivity analysis, and evaluation of dispersion.
One- and two-way sensitivity analysis of test characteristics were performed using values obtained from the literature; prevalence of disease and performance of clinical examination were not included in the analysis.
In addition, these activities require an ability to assess deviations from projected liabilities in the same way sales and expense deviations are assessed via standard sensitivity analysis to gauge acceptable statistical risk and uncertainty.
When the board approved the ED, the staff suggested that sensitivity analysis would prove the most controversial aspect of the statement, and according to Neagle, that was the case.