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.

HardTechnical

78 practiced

Case study: CFO asks you to quantify the ROI of a proposed price increase using price elasticity of demand. You have historical price/volume pairs that suggest elasticity ranges from -0.5 to -1.2. Describe your modeling approach to test the pricing change across this elasticity range, how you'd compute expected revenue and profit at each elasticity point, and how you'd recommend a go/no-go decision with sensitivity to elasticity uncertainty.

MediumBehavioral

97 practiced

Tell me about a time you used sensitivity analysis to influence a strategic decision. Describe the situation, what drivers you tested, how you presented results, the stakeholders involved, the decision that followed, and what you learned.

HardTechnical

67 practiced

You have to compute sensitivity across 10 price levels and 10 volume levels for a catalog of 1M SKUs and surface the top 100 SKUs with highest downside risk on a dashboard. Describe an end-to-end solution covering data storage, pre-aggregation, compute strategy (e.g., distributed SQL, Spark), approximate ranking techniques, and dashboard implementation choices to keep UI latency < 3s.

MediumTechnical

75 practiced

Explain how changes to inventory days (days inventory outstanding) propagate to cash flow in a monthly model. Provide formulas linking inventory days to inventory balance, working capital change, and operating cash flow. Then calculate the monthly cash impact if DIO increases by 5 days on average for a company with COGS $180M annually and 360-day convention.

EasyTechnical

76 practiced

Given the following sales table schema, write a SQL query (ANSI SQL) that returns monthly revenue by product_id and product_category for the last 12 full months. Schema:

sales(order_id PK, order_date timestamp, product_id int, product_category varchar, units_sold int, unit_price decimal)

Requirements: group by year-month, product_id, product_category; exclude refunds; handle nulls in unit_price by treating as zero; sort by month desc then revenue desc.

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