Which of the Following Statements About Sensitivity Analysis Is TRUE

question 152

Multiple Choice

Which of the following statements about sensitivity analysis is TRUE?

• A)It is a technique which is used to examine past results.
• B)It can be used in CVP to show changes in operating income if variable costs per unit change.
• C)It examines the relationship between production and service departments.
• D)It shows the impact of a manager's behaviour.
• E)It is relevant for isolating conversion costs.

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Definitions:

Long-Term Debt

Debt obligations that are due in more than one year, used by businesses and governments to finance their operations.

Common Shares

Common Shares are units of ownership in a company that entitle the shareholders to vote at shareholders' meetings and receive dividends.

EBITDA

Earnings before interest, taxes, depreciation, and amortization.

Financial Strength

A measure of a company’s ability to meet its financial commitments, indicating its overall financial stability.