11.6.  Sensitivity Analyses

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The Guide > 11.  Financial Projections > 11.6.  Sensitivity Analyses

Present the key results of a 'what-if' analysis based on "best" and "worst" case scenarios. As a general guide, be conservative even when presenting the "best" case.

When planning scenarios, take account of possible project start-up delays, sales volume shortfalls, lower price levels and higher costs. For example, what would be the financial outcome (or additional funding requirement) if sales volumes and prices are both 90% of targets but direct and overhead costs are each 110% of planned?

Indicate break-even points and explore the consequences of incrementing volumes, prices and costs (e.g. by 10%, 15%, 20% etc.). Only present high-level summaries – relegate the detailed calculations to appendices or retain them as working papers.

Exl-Plan has a powerful, simple-to-use facility for doing this type of analysis. Its more powerful versions contain several unique tools for sensitivity analysis including a global analyzer, automatically-generated, what-if tables and a DuPont-type profitability planner (see diagram below).

 

For help with financial projections, "what-ifs" and sensitivity analyses, see Financial Projections with Exl-Plan.

For latest information, see the Financial Projections section in the Business Plan Guide at http://www.planware.org/gfinancials.htm

 



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