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 ?
This not only is an efficient way to perform what-if analysis, but the resulting table also provides instant documentation of the substitution process, as shown in exhibit 4, at left.
Based on Badger, Tuscany Design's high-performance platform, Tego includes an option for integrated timing and power analysis that allows engineers to quickly perform sophisticated what-if analysis on the design using intuitive graphical manipulation.
The package includes, at an extra cost, an integrated tax planning and what-if analysis module.
0 provides several options for performing what-if analysis to compare different consolidation scenarios.
All are relatively easy to use and offer some form of what-if analysis.
Analysis: Dynamic, realistic simulations validate models and enable what-if analysis of alternative process designs and rules.
In addition, a number of other improvements have been added, the most notable of which include an ability to support multi-field data validations, and support for robust what-if analysis via pricing models.
Finally, as the execution picture changes due to supply de-commits, buyers can initiate rapid what-if analysis on supply events and understand the impact on the plan with plan-to-plan comparison.
TradeCapture's TC Maestro(TM) product provides real-time P&L, Risk Analytics and What-If Analysis for banks, hedge funds and high volume traders.
The new version of Chip2Nite also has speed and capacity improvements throughout the entire platform, with 5-10 times improvement in typical database load times critical to perform rapid prototyping and what-if analysis.
Offering both the UNIX and Linux platforms provides the ability for airlines without an extensive information technology infrastructure or support staff to deploy the system on standard personal computers, giving analysts the ability to conduct better what-if analysis as well as vastly improve crew planning operations.