Order Assignments Now Get Upto 50% Off “Let’s fight, Help and Win” UPTO 50% OFF due to COVID-19 break down Order Now

Introduction To Financial Administration

Introduction To Financial Administration

Sensitivity Analysis And Scenario Analysis

Sensitivity analysis: A Sensitivity analysis states about the changes in one variable may affect other variables. This technique is used to predict the changes in results due to occurrence of different situations. Firms use sensitivity analysis to determine their cash flow if there is any change in sales of the firm (Brigham and Houston, 2011).

A+ Grades @Affordable Prices! We deliver all academic papers from dissertations & assignments to thesis, & case studies. 5000+ satisfied students, you could be next! Place Your Order Now! Order Now

Example: In the below table changes in price of the product affects the sales revenue of the company.

Sensitivity Analysis


Scenario analysis: In scenario analysis the possible results of the future are identified by considering the different situations. It analyze that what will be the outcome if any worst or favorable case happens (Brigham and Houston, 2011). Firms generally used this method to calculate expected value of its investment.

Example: suppose the initial cost of firm’s project is 10000 and its life is 7 years.

  • Best case scenario: Cash flows at the end of 5th year are 15000.
  • Worst case scenario: Cash flow at end of 7th year is 15000.

Real Options

Real options are those options which are based on tangible assets in which the investor has the choice that whether they should expand the project or cease the project and it is depend upon occurrence of certain conditions (Treanor, 2012).

Working of Real Option

Suppose a company invests in project, management may have an option that whether they should expand the project, abandon the project, downsize the project or there is any option for the growth in the project (Bennouna, Meredith and Marchant, 2010).

There are many real options and it may depend upon the different situation of the project. Growth option is the favorable option as this option facilitates the investor to identify the opportunity that whether the firm will get more return from the project or there are any chances of growth in future for the project (Treanor, 2012).


  • Treanor, D.S. (2012). The flexibility and benefits of operating a diverse fleet: an analysis using real options. Management Research Review. 35(6). pp.462 – 472.
  • Bennouna, K., Meredith, G. G. and Marchant, T. (2010). Improved capital budgeting decision making: evidence from Canada. Management Decision. 48(2). pp.225 – 247.
  • Brigham, F. E. and Houston, F. J. (2011). Fundamentals of Financial Management Concise. Cengage Learning.
Download Full Sample
Cite This Work To export references to this sample, select the desired referencing style below:
Global Assignment Help. (2022). . Retrieved from: https://www.globalassignmenthelp.com/free-samples/financial-administration
Copy to Clipboard
Copy to Clipboard
Global Assignment Help (2022) [Online]. Retrieved from: https://www.globalassignmenthelp.com/free-samples/financial-administration
Copy to Clipboard
Global Assignment Help. ' ' (Global Assignment Help, 2022)https://www.globalassignmenthelp.com/free-samples/financial-administration
Copy to Clipboard
Global Assignment Help. [Internet]. Global Assignment Help.(2022), Retrieved from: https://www.globalassignmenthelp.com/free-samples/financial-administration
Copy to Clipboard
Often times, students feel unable to work on assignments and think, “Who will do my assignment?” By providing "Sample" on various subjects, we are trying to help them understand all the intricacies of writing. We have the most qualified and skilled assignment writers who can provide the best assignment writing services,essay writing services, dissertation writing services, and more at the most affordable rates. Place your order now for surprising discounts.
Boost Grades & Leave Stress

Share Your Requirements Now for Customized Solutions.

Lowest Price

Delivered on-time or your money back

100+ Qualified Writers

For Best Finance Assignment Help

  • Erich Thacker
    346 - Completed Orders
    Erich Thacker View Profile Ph.D in Hospitality Management UK Hire Me
  • Mindy Crawford
    1320 - Completed Orders
    Mindy Crawford View Profile Master's in Business Mathematics and Statistics USA Hire Me
  • Barack Trump
    1241 - Completed Orders
    Barack Trump View Profile Master's in Business Studies UK Hire Me
  • 1564 - Completed Orders
    Joseph Anderson View Profile Ph.D. in accounting and finance France Hire Me
View All Writers
FREE Tools

To Make Your Work Original

  • tools Paraphrasing Tool

    Check your work against paraphrasing & get a free Turnitin report!

    Check Paraphrasing
  • tools Plagiarism Checker

    Check your work against plagiarism & get a free Turnitin report!

    Check Plagiarism
  • tools Reference Generator

    Get citations & references in your document in the desired style!

    Generate References
? Help