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.
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.
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.
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.
fatimah alotaibi 2015
Create the spreadsheet below, and we'll find a solution with Goal
Seek.
Profit = Item sold * Price per item
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.
fatimah alotaibi 2015
Click OK to see if Excel can find an answer:
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.
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.
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.
fatimah alotaibi 2015
Total outgoing =SUM(B8:B12).
Income left= income- Total outgoing.
fatimah alotaibi 2015
Click on the What if Analysis item, and select
Scenario Manager from the menu:
fatimah alotaibi 2015
• Click the Add button.
• But name for your Scenario
in the Scenario Name box.
• Select the cells you want to
change in the in the Changing Cells box.
fatimah alotaibi 2015
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
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 .
fatimah alotaibi 2015
One-Variable Data Table
A one-variable data table is used to evaluate
financial information for decision making.
fatimah alotaibi 2015
Create the worksheet:
Total profit= (B8*C8)+(B9*C9)
fatimah alotaibi 2015
To create a one variable data table, execute the following steps:
1. Select cell B13 and type =C11 (refer to the total profit cell).
2. Type the different highest price in column A.
3. 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
• Makes financial comparisons when two variables
change.
fatimah alotaibi 2015
To create a two variable data table, execute the following steps:
1. Select cell A13 and type =C11 (refer to the total profit cell).
2. Type the different unit profits (highest price) in row 13.
3. Type the different highest price in column A.
4. 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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