What financial tool is used to assess the benefits and costs of taking a particular action?

Cost-benefit analysis is a financial tool that evaluates the strengths and weaknesses of alternatives in a situation to determine the best course of action. It involves quantifying the benefits and costs associated with a particular decision, allowing decision-makers to compare them and make informed choices. By assessing both the positive outcomes and the expenses needed to achieve those outcomes, organizations can determine whether the action is worthwhile and how it may affect their overall financial health.

In contrast, Return on Investment (ROI) specifically measures the profitability of an investment relative to its cost, providing a ratio that indicates the potential return. While ROI is useful for evaluating investments, it doesn't provide the comprehensive benefits and costs assessment that a cost-benefit analysis does.

Expense tracking, on the other hand, involves monitoring outgoing finances and is important for budgeting but does not provide the analytical framework needed to justify or assess actions taken.

Financial forecasting focuses on predicting future financial outcomes based on historical data and trends. It helps organizations plan for future revenues and expenses but does not assess the benefits versus costs of current actions in a direct manner as cost-benefit analysis does.

Thus, cost-benefit analysis stands out as the most effective tool for assessing the benefits and costs of specific actions.