What is Sensitivity Analysis?
Sensitivity Analysis A technique used to determine how different values of an independent variable impact a particular dependent variable under a given set of assumptions; widely used in forecasting, valuation, and risk management.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Sensitivity Analysis” Used in Practice?
Sensitivity analysis enables management to assess the impact of key variables, such as interest rates or sales growth, on projected earnings.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Sensitivity Analysis?
A technique used to determine how different values of an independent variable impact a particular dependent variable under a given set of assumptions; widely used in forecasting, valuation, and risk management.
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