EXCEL: EFFECTIVE DECISION MAKING TOOLS(What-If Analysis)

www.proactivecha.com

What is WHAT-IF ANALYSIS?

It is the process of

changing the values in cells

to see how those changes

affect the outcome

of formulas on the worksheet.

In relation to this, you need

to create scenarios to

analyze.

What is a SCENARIO?

A scenario is a set of values

that Microsoft Excel saves

and can substitute

automatically in the

worksheet.

Why is SCENARIO important?

Because you can use

scenarios to forecast

the outcome of a worksheet

model.

Rationale

What can you do by using WHAT-IF SCENARIOS?

You can use several

different set of values in one

or

more formulas to explore

various results

HERE’s a very simple exercise

This example pertains to

BUDGET forecasting

But before we start creating

What-If Scenarios

we have to create a

formula for the budgets

highlight ALL cells and in the active cell up in

the corner,

then, write the formula

=B4 X Net Sales

lock it by hitting F4 twice

Take a look at this scenario

and we will learn how to create them

we defined the first scenario in the table above

that we used in the formula for

the first scenario

However, in the other scenario we will create

our own

Excel will use the same formula in

those scenarios

and populate the values for

us

To create multiple

scenarios

Go to “DATA RIBBON”

Click “WHAT-IF ANALYSIS”

Then, select “SCENARIO MANAGER”

A pop up will appear, click the “ADD”

button

It will then, ask you to provide

few inputs such as:

“SCENARIO NAME”

Write “Scenario 1”

Outline the cell range

and if required add comments

and click “OK”

Take NOTE!

Excel will automatically populate the

values by

clicking “OK” and then CLOSE

and your first scenario is

created

Remember the steps stated

above

Because we are going to create

different Budget

scenarios

Once again, go to “DATA RIBBON”

Click “WHAT-IF ANALYSIS”

Then, Click “SCENARIO MANAGER”

As you can see, the first

scenario you have created

has been populated by

Excel

Your First Scenario

Now, Let’s create the

second scenario

Click the “ADD” button

Click “ADD”

see the range we have

defined earlier?

This is the range we have provided earlier

Excel assumed that we are

going to use it again,

which is fine

Type SCENARIO 2

Click

“OK”

Provide scenario no. 2 and click “OK”

There are two (2) options in

Scenario 2

You have two option for this

1.Change the value here or

simply click “OK” and save it

2. You can now define values

and

click the “SAVE” button

You can create as many scenarios

as needed for you to analyze

your data

Customizing Axis Tool Bar

The quickest way to display

the values

for the created scenarios

is by customizing the axis tool

bar

this will allow you to select

scenario

and Excel will populate the

values for you

using the formula we

have defined earlier

Here are the steps to

customize the axis tool bar:

Step 1: GO TO FILE AND CLICK

LEFT CLICK

Step 2: SELECT

“OPTIONS”

Step 3: GO TO “QUICK ACCESS

TOOLBAR”

AND SELECT “ALL COMMANDS”

Step 4: FROM “ALL

COMMANDS”

GO TO “SCENARIO”

CLICK “ADD” BUTTON

AND THE SCENARIO ICON WILL APPEAR

ON YOUR DEFAULT LIST

Step 5: THIS “SCENARIO”

ICON SHOULD APPEAR

Thank You!