The Process of Examining How a Change in a Single

question 73

Multiple Choice

The process of examining how a change in a single item in a budget (e.g. ,sales volume) affects one or more items in the budget (e.g. ,budgeted sales revenue and budgeted operating income) is generally referred to as:

• A)Flexible budgeting.
• B)Sensitivity analysis.
• C)Uncertainty programming.
• D)What-if analysis.
• E)Activity-based budgeting (ABB).

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Definitions:

Percentage Analysis

A financial analysis technique that involves expressing each item in a financial statement as a percentage of a base amount to assess the financial health and performance of a company.

Financial Statement

A formal record of the financial activities and position of a business, individual, or other entity, usually presented in a structured manner for a specific period.

Return On Total Assets

A profitability ratio that measures the profitability of total assets without considering how the assets are financed, computed as income plus interest expense divided by average total assets.

Profitability

A measure of how effectively a company generates profit from its revenues or assets.