Sensitivity Analysis

Take a few minutes to discover what we mean by sensitivity analysis.
Sensitivity analysis is a technique which allows the analysis of changes in assumptions used in forecasts. As such, it is a very useful technique for use in investment appraisal, sales and profit forecasting and lots of other quantitative aspects of business management.
#alevelbusiness #aqabusiness #edexcelbusiness #businessalevel
VIDEO CHAPTERS
0:00 Introduction
0:18 What is Sensitivity Analysis?
0:32 Assumptions in business forecasts
1:24 Key Questions to Ask in Business Forecasts
1:46 Sensitivity Analysis = "What-if?" Analysis
1:58 Example of Sensitivity Analysis: Forecast Profit
3:31 What if the Assumptions are Worse by 10%?
5:53 Results of the Sensitivity Analysis Example
6:08 Benefits and Drawbacks of Sensitivity Analysis

[@tutor2u-official]

Access out study resources on sensitivity analysis here www.tutor2u.net/business/topics/sensitivity-analysis

[@ifeyinwaonugha7862]

I think a better approach to sensitivity analysis will be to make all assumptions change simultaneously within realistic ranges and then evaluate their impact on profit. This way you take into account the impact of two or more independent parameter interractions (assumptions) on the sensitivity of the dependent parameter (profit). This will make sensitivity analysis more robust.

[@jamesjoyce9450]

I have an exam tomorrow and this is part of a question... so perfectly explained there I'll be watching it again tomorrow afternoon before doing that question..

[@tutor2u-official]

Good luck James!

[@lewismutua7001]

@@tutor2u-official you are the best lecturer.. You must be from Oxford, you are more than perfect. Alien!!!

[@John5ive]

This was an amazingly well explained tutorial. The brevity and complete conveyance of the concept is to be commended. Thank you!

[@tutor2u-official]

Glad it was helpful!

[@tutor2u-official]

If you find this video helpful, don't forget to like it! and SUBSCRIBE TO the tutor2u Channel to be alerted as soon as we've uploaded new topic videos like this one.

[@Mabu3035]

Very good video with useful information. I will apply this knowledge on a project I have at work now. Sbu From South Africa, Cape Town Thanks

[@JopieKlep13]

A clear explanation, thanks a lot!

[@tung-shenyang4234]

thanks this video when I am taking the exam!

[@MrTalentedPerson]

Thank you mate, this was fantastic. Great guide.

[@gopalashetty3592]

Please make a videos on monte carlo simulation on Project schedule sensitivity analysis

[@ameradam4605]

Thank you Man, that's very easy and helpful

[@tutor2u-official]

Glad it helped

[@yulduzacca]

Grateful

[@reggierosario4708]

Well explained and very helpful. Thanks !

[@tutor2u-official]

Glad it was helpful!

[@nishankhatri4589]

how can be forecast profit of 9000 unit be 130000?

[@muhammadtalha807]

thanks buddy

[@daniellem5813]

hi im still confused by how the profit dropped by 50% when 10% subtraction applied any feedback thanks

[@goldillux]

1,000,000 - 800,000 = 200,000 but 900,000 - 800,000 = 100,000 which was 50% less than 200,000

[@micaellaraignfetizanan1387]

Thank you for this!

[@tutor2u-official]

Glad it was helpful!

[@dr.kabirsharma1185]

Very nicely explained sir Your way of video is also very good. Through which application/software you created it if possible kindly let me know Sir

[@ikimran05]

Thanks.

[@tello9504]

What is this ? Financial management or finance corporate?

[@shadyr.khairy6611]

thanks

[@muhammadtalha807]

nicely explained

[@shweta176]

helpful....thanks!!

[@phillyp6969]

PRESENT SENSITIVITY

[@harithrinadhchunduriessjpy3530]

if 10% worse how vc and fc kept change any one could explain

[@domingo2977]

so you just multiply everything back by the forecast sales

[@tutor2u-official]

Yes - when you are testing the sensitivity of the other assumptions. I.e change one assumption at a time.

[@diyaniperera7891]

Are sensitivity and what-if analysis the same?

[@tutor2u-official]

Essentially - yes. Both involve testing the impact on forecasts by changing the underlying assumptions.

[@diyaniperera7891]

@@tutor2u-official no any single difference between those two??

[@The34Anubhav]

How forecast profit for Variable cost is 170000 and fixed cost is 150000?

[@amaniaalyamohtar3842]

1000000-500000-330000=170000 1000000-550000-300000=150000

[@nishankhatri4589]

@@amaniaalyamohtar3842 how forecast profit of unit sales 130000?

[@jamieg9791]

it's not a sensitivity analysis. It's GCSE calculation

[@samparnham9276]

This is a level

[@jokerpanic3]

hey could anyone help me understand how selling 1000 less units reduces your forecasted profit by £70,000?

[@jokerpanic3]

A00A thanks mate!