What is a sensitivity analysis?

Q: Outline the weaknesses of sensitivity analysis

A: Sensitivity analysis uses in capital budgeting for measuring the risk in project. It helps in…

Q: What is variance analysis? Explain?

A: Variance Analysis: Variance analysis is the process of ascertaining the deviations between actual…

Q: What determines the acceptable level of Detection Risk?

A: Detection Risk:   It is a chance that an auditor will fail to identify any material misstatement…

Q: What is the purpose of carrying out an incremental analysis?

A: Incremental analysis is also known as Relevant cost approach Differential analysis Marginal…

Q: When is Attribute sampling used?

A: Attributes sampling is a statistical sampling method used to estimate the rate of control procedure…

Q: What are the goals of a performance evaluation system?

A: Performance Evaluation System: Performance evaluation system is a system used to examine…

Q: Define sensitivity analysis

A: The process to evaluate the effect of change in one variable on the end result of a project is…

Q: Describe the benefits of benchmarking.

A: Benchmarking is a way to measure something in corporate environment, it is also used to promote…

Q: What is a key performance indicator?

A: Key Performance Indicator: Key performance indicator is the measurement metric used to evaluate the…

Q: Describe the Sensitivity Analysis method performed for Mutually Exclusive Alternatives?

A: Sensitivity analysis is a financial model that decides how target factors are influenced by changes…

Q: What is indifference curve?

A: Indifference curve: It is a diagram indicating a mix of two items that give equivalent fulfillment…

Q: What is Non-Sampling Risk?

A: Sampling: It is a procedure used by the auditor to analyze the predetermined number of observations…

Q: is profile measurement and analysis? What are the limitations of this approach?

A:

Q: How is sampling risk controlled?

A: Sampling: Sampling allows an individual obtain the information about the population of interest in…

Q: What are the characteristics of Substantive Tests?

A: Audit Planning: Audit planning is the first step in the auditing process. Auditor gathers all the…

Q: What are the relative merits and disadvantages of a current system survey?

A: System Survey: System survey is defined as the process of determining the elements of information of…

Q: How does the use of scenarios differ from sensitivity analysis?

A: Sensitivity analysis and scenario analysis are the assessment techniques that are used in investment…

Q: How can sensitivity analysis be incorporated in DCF analysis?

A:

Q: How does Sampling Risk compare to Non-Sampling Risk?

A: Risk:   It is a probability of the financial statements being materially incorrect even though the…

Q: How is the ERC (efficient response coefficient) determined and which role analyst forecasts play in…

A: The earnings response coefficient, or ERC, is a calculated ratio between stock returns and the…

Q: What are the two main variables the researcher should consider collecting data for the purpose of…

A: Research is the systematic study of finding solutions to a problem. It is the search for extending…

Q: How are Sensitivty Analysis and Scenario Analysis different in details?

A: Sensitivity analysis is the evaluation of the impact on the project when there may be a few…

Q: Describe the relationship between Simulation analysis, Scenario analysis and Sensitivity analysis –…

A: Sensitivity Analysis refers to an assessment of the impact of the changes in one variable on the NPV…

Q: What is Systematic Sampling?

A: Systematic sampling is process to select the products in random way but in a periodically manner.

Q: What is a sensitivity analysis, and how does it work? Can you provide an illustration of this?

A: Here is the Answer

Q: What is the DCF method?

A: DCF is a complex tool for valuation which approximates the value of any investment depending upon…

Q: What is counterbalancing?

A: Errors: The comparability and consistency of the financial statements decreases when a company…

Q: What is objective risk

A: Risk means the possibility of happening loss. Risk is directly related to the loss. If the amount of…

Q: What is sensitive analysis?

A: Sensitive analysis is a method for predicting the outcome of a decision if a situation turns…

Q: What is sequential sampling? What are its advantages and disadvantages?

A: In this type of sampling, sequence of sample is taken from a group.In this method of sampling,…

Q: What factors affect sample size?

A: Definition:   Sampling: Sampling allows an individual to obtain information about the population of…

Q: What is the general goal of trend analysis?

A: Trend analysis:   Trend analysis is prepared to make comparison between the previous year's…

Q: What are the two stages in risk assessment?

A: Risk assessment is the process which involves analysis & identification of events that can have…

Q: What are representative strengths of NPO?

A: Non Profit Organisations (NPO) are expected to be driven by a need to fulfill a social purpose…

Q: What is the replacement analysis?

A: Replacement analysis is one of the keys examinations in capital budgeting.

Q: Define benchmarking

A: Definition : Benchmarking can be understood as the method of contrasting company procedures and…

Q: What advantage does scenario analysis have over sensitivityanalysis?

A: In finance, we are required to analyze the change in value of one variable over the change in the…

Q: What is Discovery Sampling?

A: Discovery sampling can be used by the audit team as follows: Go to the AICPA sampling tables…