4  What-if analysis

Excel models are often designed with parameters in the beginning of the spreadsheet (the upper left part) and calculations and results in another part. The nice thing about spreadsheets is that we can change one or more parameters and observe the effect on the results. In a budget we can for instance perform a sensitivity analysis (what-if analysis) by changing the price of a product, the number of units sold, etc., to see how the cash flow changes.

The goal seek function and the solver are excellent tools when we want to perform more advanced sensitivity analyses. The goal seek function is designed for plain problems where we want to find the parameter value that gives a specified result. The solver is suitable for more complex ...

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