________ is the process of varying key estimates to identify those estimates that are the most critical to a decision.
A)A demand forecast
B)A sensitivity analysis
C)A pro forma income statement
D)The cash flow statement

Question

Quizplus · Accepted Answer

Sensitivity analysis is a common technique used in decision-making to understand how sensitive an outcome is to changes in certain key estimates or assumptions. By varying key estimates, it allows decision-makers to identify which estimates have the greatest impact on the outcome, and therefore which ones should be given the most attention and scrutiny when making a decision. The other options listed are financial statements or forecasts, but do not involve the process of varying key estimates to test for sensitivity.

________ Is the Process of Varying Key Estimates to Identify