Using Exl-Plan > Doing Sensitivity Analyses
Once base case assumptions have been entered into an Exl-Plan model, these can be readily altered to explore alternative scenarios covering best, most likely or worst cases.
Changing Exl-Plan's Results
The most significant changes are likely to cover the following:
To apply these changes consistently, it will be necessary to modify:
|•||Sales in Assumptions Report No. 1.|
|•||Other direct costs and Desired inventory levels in Assumptions Report No. 2.|
These may require modification to:
|•||Net selling prices in Assumptions Report No. 1|
|•||Cost of material/pack or goods for resale percentages in the Assumptions Report No. 2 to offset the changed sales due to altered prices. Unless this is done, these costs will move in line with sales.|
Materials/pack or goods for resale costs
These changes can be applied by altering Cost of material/pack or goods for resale percentages and Desired inventory levels in the Assumptions Report No. 2
Desired changes can be made in Assumptions Report No. 3.
Make changes to credit terms in Assumptions Report No. 7.
Reducing Debt and Injecting Equity
Replace debt by equity in Assumptions Report No. 5.
When doing sensitivity analyses, Exl-Plan will automatically increase/reduce the value of receivables and payables in balance sheets (based on the credit terms in Assumptions Report No. 7) in line with any changes made to selling prices and volumes, cost of materials/packaging or goods for resale, or inventory.
Tools for More Powerful Sensitivity Analyses
Note that the more powerful versions of Exl-Plan (especially Super, Super Plus, Ultra and Ultra Plus) contain extensive tools for doing sensitivity analyses including:
|1.||Sensitivity analysis tool for globally changing selling prices, volumes, direct costs and overhead expenses for months, quarters and years. |
|2.||Automatically generated 'what-if' tables which display the impact of incremental changes in sales volumes, selling prices, cost of sales and overhead expenses on projected profitability for the first year. |
|3.||DuPont-style profitability chart based on the first-year projections which allows a user to explore the impact of specific changes in key variables and assumptions on overall profitability. |
For more information, see Introducing the Exl-Plan Range.
Doing Sensitivity Analyses
Guidance on Entering Assumptions
Financial Modeling & Business Planning
Preparing to Plan
Pitfalls & Dangers