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Mastering Cash Flow and Valuation Modelling by Alastair Day

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16

Optimisation

Outline

Goal Seek

Solver

Coding Solver

Summary

OUTLINE

The case model provides information about valuation and debt servicing using the sensitivity methods but does not illustrate how (or whether) the amounts are ‘enough’ to satisfy the competing demands of returns and debt covers. The model needs to have some targets and to include some degree of optimisation as a means of checking the outcomes. You should always be looking at the flexibility of the model and seeing if it is possible to gain more management information. The model currently uses:

  • inputs–calculations–outputs information flow as a basic model design;
  • data tables or matrices;
  • a built-in Scenario Manager.

Since the model has been developed using best practice ...

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