Microsoft Office Excel 2010 ® ® Tutorial 10: Performing What-If Analyses

XP New Perspectives on Microsoft Excel Objectives Explore the principles of cost-volume-profit relationships Perform a basic what-if analysis Use Goal Seek to calculate a solution Create a one-variable data table Create a two-variable data table Create and apply different Excel scenarios Generate a scenario summary report Generate a scenario PivotTable report

XP New Perspectives on Microsoft Excel Visual Overview

XP New Perspectives on Microsoft Excel Data Tables and What-If Analysis

XP New Perspectives on Microsoft Excel Understanding Cost-Volume-Profit Relationships Cost-volume-profit (CVP) analysis – Studies the relationship between expenses, sales volume, and profitability – Helps predict the effect of cutting overhead or raising prices on a company’s net income – Sometimes called break-even analysis

XP New Perspectives on Microsoft Excel Comparing Expenses and Revenue Types of expenses – Variable expenses change in proportion to the amount of business a company does – Fixed expense must be paid regardless of sales volume – Mixed expense is part variable and part fixed

XP New Perspectives on Microsoft Excel Determining the Break-Even Point Break-even point: revenue equals expenses A CVP chart shows the relationship between expenses and revenue

XP New Perspectives on Microsoft Excel Performing a What-If Analysis with Goal Seek What-if analysis lets you explore the impact of changing different values in a worksheet Goal Seek automates trial-and-error process – Allows you to specify a value for a calculated item – Excel returns input value needed to reach the goal – Goal Seek dialog box

XP New Perspectives on Microsoft Excel Performing a What-If Analysis with Goal Seek

XP New Perspectives on Microsoft Excel Working with Data Tables Display results from several what-if analyses One-variable data table – Specify one input cell and any number of result cells – Useful in business to explore how changing a single input cell can impact several result cells

XP New Perspectives on Microsoft Excel Charting a One-Variable Data Table Gives a better picture of relationship between sales volume, revenue, and total expenses

XP New Perspectives on Microsoft Excel Creating a Two-Variable Data Table Analyzes a variety of combinations simultaneously Uses two input cells, but displays only a single result value Must identify the row input cell and the column input cell

XP New Perspectives on Microsoft Excel Creating a Two-Variable Data Table

XP New Perspectives on Microsoft Excel Charting a Two-Variable Data Table

XP Tutorial Steps New Perspectives on Microsoft Excel

XP New Perspectives on Microsoft Excel Visual Overview

XP New Perspectives on Microsoft Excel What-If Scenarios

XP New Perspectives on Microsoft Excel Using the Scenario Manager Create scenarios to perform a what-if analysis with more than two input cells Define names for all input and result cells that you intend to use in the analysis – Defined names automatically appear in reports generated by the Scenario Manager – Using defined names makes it easier to work with scenarios and understand the scenario reports

XP New Perspectives on Microsoft Excel Using the Scenario Manager Use the Scenario Manager to define scenarios – Each scenario includes a scenario name, input cells, and values for each input cell – Number of scenarios is limited only by computer’s memory Input cells are referred to as changing cells – Contain values that are changed under the scenario – Can be located anywhere in the worksheet

XP New Perspectives on Microsoft Excel Using the Scenario Manager Edit Scenario dialog box

XP New Perspectives on Microsoft Excel Using the Scenario Manager Scenario Values dialog box

XP New Perspectives on Microsoft Excel Using the Scenario Manager View the effect of each scenario by selecting it in the Scenario Manager dialog box

XP New Perspectives on Microsoft Excel Using the Scenario Manager Editing a Scenario – Edit the assumptions to view other possibilities – Worksheet calculations are automatically updated to reflect the new scenario

XP New Perspectives on Microsoft Excel Creating a Scenario Summary Report Displays the values of the input cells and result cells under each scenario Tabular layout makes it simpler to compare results of each scenario Automatic formatting makes it useful for reports and meetings

XP New Perspectives on Microsoft Excel Scenario Summary Report

XP Tutorial Steps New Perspectives on Microsoft Excel