Sensitivity Analysis
Measuring the Impact of Changing Assumptions
Sensitivity analysis examines how changes in a single assumption affect financial results. It helps identify which variables have the greatest influence on organizational performance.
- Change one assumption at a time.
- Measure changes in financial outcomes.
- Identify critical business drivers.
- Support risk assessment.
Note
Sensitivity analysis differs from scenario analysis because only one variable changes at a time.
Summary
Sensitivity analysis highlights the assumptions that have the greatest effect on financial performance.