Altering the Inputs to a Financial Plan by Changing One

question 16

Multiple Choice

Altering the inputs to a financial plan by changing one of the assumptions is called:

• A) a redundancy check.
• B) a pro forma evaluation.
• C) goal seeking.
• D) sensitivity analysis.

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Definitions:

Model Usefulness

The effectiveness and practicality of a theoretical model in explaining, predicting, or making decisions in real-world situations.

Operating Leverage Factor

A measure that assesses the degree to which a company can increase operating income by increasing revenue, highlighting the fixed versus variable costs structure.

Sales Revenue

The total amount of money generated from the sale of goods or services before any expenses are subtracted.

Profit Increase

The growth in profit from one period to another, often measured as a percentage increase, indicating the company's improved financial performance.