DEALING WITH UNCERTAINTY

Abstract

Comparisons of results of past ventures with forecasts provide quantitative data on uncertainities of past estimates. In venture analysis, sensitivity studies provide estimates of profits in alternative circumstances and can be very helpful in the planning stage. Where the probabilities of alternative circumstances can be estimated in advance, estimates of profits may also be expressed as probability distributions, derived from probabilistic estimates of individual factors. Provided these probabilistic estimates of individual factors. Provided these probabilistic estimates are realistic, and all relevant factors are included in an analysis, ventures can be planned to maximize the probability; ; net present worth; ; discounted cash flow; ; ; ; venture analysis; ; uncertainty; ; sensitivity; ; ; ; profits; ; INDUSTRIAL MANAGEMENT of achieving a corporate financial objective within a constraint of the risk of having to raise new money to cover cash deficiencies.