Cost-Benefit Analysis

Last Updated: October 30, 2017

Definition - What does Cost-Benefit Analysis mean?

A cost benefit analysis (CBA) is a process that is used when analyzing business decisions. It is a systematic approach to making estimates involving the strengths and weaknesses of decisions in business. Its two main purposes are determining whether a decision is goods based on benefits vs costs, and to compare how beneficial it is with other possible options.

Safeopedia explains Cost-Benefit Analysis

Decisions that use a CBA are usually monetary, but some analysts or consultants build in models for businesses to determine the costs of intangibles, such as the potential benefits of living in a particular town. Most analysts or consultants also build supplementary models for a business to do with opportunity costs. Opportunities for future benefits are weighed against the immediate costs involved.