Excel All-in-One For Dummies

Chapter 1

Performing What-If Analysis

IN THIS CHAPTER

Doing what-if analysis in one- and two-variable data tables

Creating and playing with different scenarios

Performing goal seeking

Using the Solver add-in utility

Because electronic worksheet formulas are so good at automatically updating their results based on new input, they have long been used (and, sometimes, misused) to create financial projections based on reasonable (and, sometimes, dubious) assumptions. Under the guise of what-if analysis, company number crunchers often use Excel as their crystal ball for projecting the results of promising (and, sometimes, harebrained) schemes designed to make the company more money.

As you start dabbling in this form of electronic fortune-telling, keep in mind that the projections you get back from this type of analysis are only as good as your assumptions. So, when the results of what-if analysis tell you that you’re going to be richer than King Midas after undertaking this new business venture, you still need to ask yourself whether the original assumptions on which these glowing projections ...