Explain What Is Meant by Sensitivity Analysis in Budgeting,and Discuss

question 46

Essay

Explain what is meant by sensitivity analysis in budgeting,and discuss how managers might use this technique in practice.

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Definitions:

Hooke's Law

A principle of physics that states the force needed to extend or compress a spring by some distance is proportional to that distance.

Spring Scale

A scale that measures weight or force by the stiffness of springs.

Hooke's Law

A principle stating that the force needed to extend or compress a spring by some distance scales linearly with respect to that distance.

Inversely

In an opposite or reverse manner, often referring to the relationship where as one variable increases, another decreases.