Sensitivity analysis

Sensitivity analysis is a branch of finance dealing with analysis of a financial model to determine the impact of inputs on outputs.

According to Atrill et. al. in their book Accounting: An Introduction, sensitivity analysis is a technique that involves taking a single variable (e.g. volume of sales) and examining the effect of changes in the chosen variable on the likely performance and position of the business. An assessment can then be made of the sensitivity of financial performance and position to changes in that variable.

External link

• Sensitivity Analysis Index