If a company knows that a price change will have an effect on a number of other forecast variables, such as the sales forecast, then the company might require scenario analysis rather than sensitivity analysis.

Question

Quizplus · Accepted Answer

Scenario analysis takes into consideration multiple variables and evaluates how they might change based on different scenarios, while sensitivity analysis only examines the impact of changes in one variable at a time. Therefore, if a price change will affect multiple variables, scenario analysis would be more appropriate.

If a Company Knows That a Price Change Will Have