Sensitivity Analysis Provides Information On

question 99

Multiple Choice

Sensitivity analysis provides information on:

• A) whether the NPV should be trusted and may provide a false sense of security if all NPVs are positive.
• B) the need for additional information as it tests each variable in isolation.
• C) the degree of difficulty in changing multiple variables together.
• D) Both whether the NPV should be trusted and may provide a false sense of security if all NPVs are positive; and the need for additional information as it tests each variable in isolation.
• E) Both whether the NPV should be trusted and may provide a false sense of security if all NPVs are positive; and the degree of difficulty in changing multiple variables together.

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Definitions:

Average Total Assets

The average value of all assets owned by a company over a period, typically calculated by combining the beginning and ending values for a period and dividing by two.

Asset Turnover

A ratio that determines the competence of an organization in using its assets to generate income from sales.

Book Value

The net value of a company's assets minus its liabilities, often used to assess its equity value.

Intangible Asset

An asset that is not physical in nature, such as patents, copyrights, trademarks, and goodwill.