What if analysis By: Fatimah Alotaibi

fatimah alotaibi 2015 What-if analysis Also defined as sensitivity analysis, what-if analysis is a brainstorming technique used to determine how projected performance is affected by changes in the assumptions that those projections are based upon. What if analysis is often used to compare different scenarios and their potential outcomes based on changing conditions.

The Benefits of What-if Analysis fatimah alotaibi 2015 The Benefits of What-if Analysis Not only can you make better and more informed decisions by changing assumptions and observing or estimating the results, you are also better able to predict the outcome of your decisions.

Three kinds of what if analysis tools with Excel: fatimah alotaibi 2015 Three kinds of what if analysis tools with Excel: Goal Seek . Scenario Manager. Data table.

fatimah alotaibi 2015

fatimah alotaibi 2015 Goal seek Goal seek uses a process of changing the values in cell to see how those changes affect the outcome of formulas on the worksheet. The command use iteration in a controlled way to desired results. You can use Goal Seek when you know the desired result of a single formula but not the input value the formula needs to determine the result.

Consider this problem: fatimah alotaibi 2015 Consider this problem: Your business has a modest profit of 25,000 You've set yourself a new profit Goal of 35,000. At the moment, you're selling 1000 items at 25 each. Assume that you'll still sell 1000 items. The question is, to hit your new profit of 35,000, by how much do you have.

Create the spreadsheet below, and we'll find a solution with Goal fatimah alotaibi 2015 Create the spreadsheet below, and we'll find a solution with Goal Seek. Profit = Item sold * Price per item

From the What if Analysis menu, select Goal Seek fatimah alotaibi 2015 Click on Data. From the What if Analysis menu, select Goal Seek The "Set cell“ =where the formula is. The "To Value“= the new value.

Click OK to see if Excel can find an answer: fatimah alotaibi 2015 Click OK to see if Excel can find an answer:

Make sure the Set cell Reference is to a cell that contains a fatimah alotaibi 2015 Make sure the Set cell Reference is to a cell that contains a formula, function , or cell reference. Make sure the To value cell value is a reasonable value . Make sure the By changing cell reference is a number or blank, and not formula, function, or cell reference . Make sure there is a link by formulas between the two cells you entered in Goal Seek . However complicated link might be, they must be related for the Set cell to be a function of the By changing cell.

fatimah alotaibi 2015 Scenario Manager Use Scenario Manager to solve complex business solutions when more than one factor can be used.

Scenario Manager Scenarios are useful when data is uncertain. fatimah alotaibi 2015 Scenario Manager Scenarios are useful when data is uncertain. A scenario may contain up to 32 variables. Use Scenario Manger to determine best case and worst case scenarios. Scenario Manager finds solutions to complex business problems. Use named cells to help analyze results.

For example, What if I reduce the amount I'm spending on food? fatimah alotaibi 2015 For example, What if I reduce the amount I'm spending on food? How much will I have left then? Scenarios can be saved, so that you can apply them with a quick click of the mouse. An example of a scenario you might want to create is a family budget. You can then make changes to individual amounts, like food, clothes, or fuel, and see how these changes effect your overall budget.

Total outgoing =SUM(B8:B12). Income left= income- Total outgoing. fatimah alotaibi 2015 Total outgoing =SUM(B8:B12). Income left= income- Total outgoing.

Click on the What if Analysis item, and select fatimah alotaibi 2015 Click on the What if Analysis item, and select Scenario Manager from the menu:

But name for your Scenario in the Scenario Name box. fatimah alotaibi 2015 But name for your Scenario in the Scenario Name box. Select the cells you want to change in the in the Changing Cells box. Click the Add button.

fatimah alotaibi 2015

Now that we have one scenario we can add a second one. fatimah alotaibi 2015 Now that we have one scenario we can add a second one. Click the Add button again. You'll get the Add Scenario dialogue box . Type a new Name, something like Budget Two. The Changing Cells area should already say B7:B9. So just click OK.

fatimah alotaibi 2015 Click the Show button at the bottom. The values in your spreadsheet will change, and the new budget will be calculated.

fatimah alotaibi 2015

How to Create a Report from a Scenario fatimah alotaibi 2015 How to Create a Report from a Scenario From the Scenario Manager dialogue box, click the Summary button to see the following dialogue box:

fatimah alotaibi 2015

fatimah alotaibi 2015 Data Tables A data table automates data analysis and organizes the results when one or two variables change. Takes sets of input values and determine possible results .

One-Variable Data Table fatimah alotaibi 2015 One-Variable Data Table A one-variable data table is used to evaluate financial information for decision making.

Total profit= (B8*C8)+(B9*C9) fatimah alotaibi 2015 Create the worksheet: Total profit= (B8*C8)+(B9*C9)

To create a one variable data table, execute the following steps: fatimah alotaibi 2015 To create a one variable data table, execute the following steps: Select cell B13 and type =C11 (refer to the total profit cell). Type the different highest price in column A. Select the range A13:B18. We are going to calculate the total profit if you sell 60 for the highest price, 70 for the highest price, etc.

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Two-Variable Data Table fatimah alotaibi 2015 Two-Variable Data Table Makes financial comparisons when two variables change.

To create a two variable data table, execute the following steps: fatimah alotaibi 2015 To create a two variable data table, execute the following steps: Select cell A13 and type =C11 (refer to the total profit cell). Type the different unit profits (highest price) in row 13. Type the different highest price in column A. Select the range A13:D18. We are going to calculate the total profit for the different combinations of 'unit profit (highest price)' .

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