Question

How can a business manager use Binomial probability distribution to assess a profitability of a new firm?

Answer 1

The binomial probability distribution is sought as a method which is used for calculation of the success or the failure of a project if it is repeated multiple times. business manager can use binomial probability distribution to the greatest possible extent in order to decide various aspect of management like-

1.you can use the binomial model for probability distribution and we can assign different types of success and failure probabilities in order to arrive at a clear picture.

2.he can also do scenario analysis which will be based upon the binomial probability distribution.it would take into account different kind of probabilities in order to arrive at clear picture of profitability of a project

3.binomial probability distribution can be used for various kinds of sales forecasting and it can be hence used for revenue estimation of a particular project.

4.binomial probability distribution can also be used in case of the risk evaluation of the particular project so it can be measured with efficiency that how much risk is associated with the profit earning ability of this project

So binomial probability method is highly efficient in order to decide upon the profitability of a project which would be a deciding factor in order of its acceptability or rejection.