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A key type of sensitivity analysis for managers is to play "what-if" with the cash budget...

A key type of sensitivity analysis for managers is to play "what-if" with the cash budget so as to anticipate outcomes and take steps to minimize the effects of shortfalls in cash balances.

True

False

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Answer #1

Answer is "True". .

As the term senitivity analysis term itself states that we attempt to determine the ultimate result of a differentiated resulf of outcome considering changes in prevailing conditions and inputs.

Cash budget depicts about the projection of inflow and outflow of cash for a particular period.

It is so sensitive that a very change in sales figure and sales collection figures might negatively hit the cash budget. So the manager who prepares the cash budget should have a strong soft skill of "What-If Analysis"

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