Comment on the following: Sensitivity analysis does not make any decision of itself.

Samuel and Wilkes in "Management of Company Finance" opine that sensitivity analysis does not make any decisions of itself. It is a practicable procedure that presents derived information in particularly revealing way. The method is usually applied to each possible project as it arises. It could be used for the total company activities-existing investments plus new proposals, but such a grand exercise would detract from the essential simplicity of the method and not be warranted for all the largest projects. When all the sensitivity data have been assembled a judgement has then to be made as to whether the picture presented is acceptable or not. In this decision the management may subjectively estimate the likelihood of each scenario, or they may play safe and consider only the worst possibilities. It is unlikely that the market as a whole would have access to the same volume and quality of information as that given by the sensitivity analysis - and this would have to be done by intelligent guess too. A sensitivity analysis is particularly helpful in large projects that would have a substantial impact on the company's operations.