Which of the Following Best Describes the Term "Sensitivity Analysis

question 22

Multiple Choice

Which of the following best describes the term "sensitivity analysis"?

• A) It is a testing technique to determine how results would differ if key assumptions are changed.
• B) It is an analysis of the emotional sensitivity of a company's employees.
• C) It is an evaluation of the accuracy of the assumptions.
• D) It evaluates a company's financial condition by doing financial statement analysis.

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Definitions:

HD

Typically refers to "High Definition," denoting a high level of detail in images or videos, but in a financial context, it could relate to "Home Depot" stock symbol or a concept not standardized across finance.

Operating Costs

Expenses associated with the day-to-day functions of a business, excluding the costs associated with producing goods or services.

Days Sales Outstanding

A measure of the average number of days that it takes a company to collect payment after a sale has been made, indicating the effectiveness of a company's credit and collection policies.

Receivables

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.