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11. Objective: Identify the role of sensitivity analysis in evaluating projection results. FAR Corporation imports high quality chocolate, distributing to large regional candy makers as

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11. Objective: Identify the role of sensitivity analysis in evaluating projection results. FAR Corporation imports high quality chocolate, distributing to large regional candy makers as the primary ingredient in their branded chocolate confections. The company purchases from five sources. Two of the sources are in a country that recently erupted into what is believed will be lengthy and violentpolitical turmoil. High quality chocolate is now in short supply, and FAR has been unable to secure acceptably priced replacement suppliers for about 23% of its needs, because the world's candy and food giants have pre-existing contingency contracts that guarantee access to chocolate during a serious supply disruption. FAR does not have comparable contingency arrangements, Assume you are developing a financial projection for the next twelve months. To date, FAR has been veryprofitable and has very positive cash flow. Which of the following projection variables are most critical touse in a sensitivity analysis that tests the company's continued ability to generate cash flow needed to service term debt? a) Sales growth % and gross profit margin. by Gross profit margin and inventory days. c) Sales growth % and inventory days. d) Gross profit margin and receivable days

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