Sensitivity Analysis of the Base-Case Financial Model Is a Useful

question 33

Multiple Choice

Sensitivity analysis of the base-case financial model is a useful tool for which of the following reasons?

• A) To determine how long the development process can profitably last
• B) To understand how many technical people are needed to make the project a success
• C) To help understand the basic trade-offs of resources committed and cash received
• D) To identify the necessary product launch date
• E) To set marketing and sales budgets

---

Definitions:

Income Statement

A financial report that shows a company's revenues, expenses, and net income over a specific period of time.

Functional Currency

The primary currency of the primary economic environment in which an entity operates, usually used in its financial reporting.

Sales

The total receipts a company generates from selling its goods or services over a certain period of time; also often referred to as revenue.

Exchange Rates

A financial metric that determines how much one currency is worth in terms of another. It facilitates international trade and investment.