An optimized nonlinear least-squares fit algorithm for data processing in cavity ring-down spectroscopy (CRDS) is discussed, which improves the calculation efficiency substantially over using a general purpose fitting package. Theoretical absorption sensitivity limits for both the detector noise and the shot noise limited situations are derived and compared with experimental results. The effect of limiting the bandwidth of detection system on ring-down signal is discussed and compared with real ring-down data. The optimal trigger level and fitting interval are obtained for continuous wave cavity ring-down spectroscopy (cw-CRDS) in both the detector noise and shot noise limits, with the resulting sensitivity in units of cm(-1) per (Hz(1/2)) derived. Interestingly, it is found that the optimized shot noise limited sensitivity in cw-CRDS method is, in principle, comparable with the ultimate sensitivity of noise-immune cavity-enhanced optical heterodyne molecular spectroscopy (NICE-OHMS).