Scenario and Sensitivity Analysis Questions

Techniques for designing executing and interpreting scenario and sensitivity analyses to understand how changes in assumptions affect financial outcomes. Coverage includes designing base case upside and downside scenarios one way and multi way sensitivity testing stress testing key drivers running variance analysis against budgets or forecasts and projecting how operational metric changes cascade through income statement balance sheet and cash flow. Candidates should be able to model business changes such as price increases volume shifts cost reductions or inventory adjustments state and justify assumptions perform contribution margin reasoning interpret variances and communicate limitations implications and recommended actions.

EasyTechnical

83 practiced

Explain the difference between scenario analysis and sensitivity analysis in the context of business finance and BI reporting. For each technique: define it, give two concrete business examples (e.g., pricing change, supply shock, promotion), list typical inputs and outputs, and state when you would prefer one over the other for communicating with executives and for internal model validation.

MediumTechnical

96 practiced

In Power BI write a DAX measure that calculates revenue under a selected scenario using two tables: Sales(product_id, units_sold, unit_price) and ScenarioParameters(name, price_multiplier, volume_multiplier). Provide DAX that multiplies unit_price by the selected scenario's price_multiplier and units_sold by volume_multiplier, and then sums revenue. Assume ScenarioParameters has a single selected row via a slicer.

HardTechnical

88 practiced

Explain how to simulate correlated uncertainties between price and volume in a Monte Carlo framework. Describe how you'd estimate the correlation matrix from historical data, how to generate correlated draws (mention Cholesky decomposition), and show how to interpret results when correlation changes scenario outcomes materially.

HardTechnical

98 practiced

Given a consolidated income statement, balance sheet, and cash flow for a product line, describe step-by-step how a one-unit increase in sales volume cascades through to cash flow and balance sheet: show impacts on revenue, COGS, inventory, receivables, payables, EBITDA, taxes, capex if any, and ending cash. Explain any timing or working-capital timing assumptions you would need to document.

HardTechnical

68 practiced

You need to run a multi-way sensitivity across five numeric drivers (price, volume, variable cost, marketing spend, churn) where each driver has 5 levels. With a product catalog of 50,000 SKUs, explain how you would design an efficient SQL solution to compute outputs for the full grid (5^5 combinations) without recomputing heavy joins per combination. Discuss indexing, pre-aggregation, and use of procedures or set-based generation.

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