What is Cost-Benefit Analysis? Definition and meaning

Cost-Benefit Analysis

Definition: Cost-Benefit Analysis is a weighing-scale approach for decision making.
All positive elements (cash-flows and other intangible benefits) are put on one side of the balance and all the negative elements (the costs and disadvantages) are put on the other.
Whichever weighs the heavier, wins.
A CBA may or may not include non-financial (intangible) costs and benefits. Especially in more strategic investments, frequently the intangible benefits outweigh the financial benefits.
A CBA may or may not include the time value of money and take into account associated risks.

💡

Learn more about Cost-Benefit Analysis.

More on individual decision making: Anchoring Bias, Bayesian Theory, Black Swan Theory, Bounded Rationality, Cognitive Bias, more on individual decision making...

You may also like: Full-time MBA, Executive MBA, Executive Education, Online MBA.

MBA Brief offers concise, yet precise definitions of concepts, methods and models as taught in a study Master of Business Administration.

We like to keep things short, and provide links to learn more about your subject.

Add MBA Brief to your desktop / iPad