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 ?
The analyst, however, thinks the guidance is conservative "given AMD has been executing and hitting its product cycle stride when Intel (INTC) is mis-executing." His sensitivity analysis suggests earnings power of $1.47 - $2.57 from AMD's x86 business.
Sovereign risks are not addressed in Fitch's sensitivity analysis.
Furthermore, in order to showcase the importance of metabolic rates in determining thermal comfort, we do two analyses on the samples generated for the sensitivity analysis. The main findings are that only using operative temperature for determining thermal comfort may result in inaccurate PMV calculations and that using the values of metabolic rates mentioned in ASHRAE Standard 55 have high probabilities of discomfort associated with them.
TRB spokesperson Alberto Suansing told the Inquirer on Monday that Somco had suggested the measure in early 2018, but was advised to first conduct a sensitivity analysis to determine its impact.
Contract notice: sensitivity analysis for line optimization in the area ashausen - lneburg - uelzen - celle within the scope of the design of the bvwp
A global sensitivity analysis figures out the relationship between the sensitivity and the calibration accuracy in a local calibration.
During the compilation of design service load spectrum, representative values of typical landing conditions can be obtained by discretizing the interval of landing parameters through sensitivity analysis. Incorrect structural load analysis may lead to excessive design, which would induce large weight and high cost at the primary stage of structure design.
Cyprus's public debt is deemed sustainable and will continue the downward path it entered in 2015, in all four sensitivity analysis scenarios, the finance ministry said.
The results of the above studies are focused on local sensitivity analysis of a single factor and study [S.sub.s] with a single factor with specific changes; however, the global sensitivity evaluation of each factor has not yet been studied.
Sensitivity analysis is the process of undertaking a systematic review of models; it studies the significance of each of the model inputs on the model output [8, 9].
Generaly, sensitivity analysis is about identification of critical factors and how their change affects behavior of investment project.