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Decision Tree

Money may not grow on trees, but decisions apparently do.

Actually, this one has more in common with a phone tree or a family tree than it does with a birch or an oak. The decision tree provides a visual representation of the cascading consequences of a particular choice.

In terms of the look of a decision tree, a family tree provides a good comparison. You've got great-grandma and great-grandpa having kids. And then each of their kids has kids, etc. As it goes down the generation, the branches multiply. Similarly, with a decision tree, the future decisions branch off from the current decision.

The decision tree provides a way to formalize the selection process, allowing executives to conceptualize the future decisions that the current choice will create.

Find other enlightening terms in Shmoop Finance Genius Bar(f)