COMPREHENSIVE

Excel Tutorial 10

Performing What-If Analyses

XPXPObjectives• Explore the principles of cost-volume-profit

relationships• Perform a basic what-if analysis• Use Goal Seek to calculate a solution• Create a one-variable data table• Create a two-variable data table• Create and apply different Excel scenarios

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XPXPObjectives• Generate a scenario summary report• Generate a scenario PivotTable report• Explore the principles of price elasticity• Run Solver to calculate optimal solutions• Create and apply constraints to a Solver model• Save and load a Solver model

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XPXPUnderstanding Cost-Volume-Profit Relationships• Cost-volume-profit (CVP) analysis expresses the

relationship between a company’s expenses, its volume of business, and the resulting profit or net income

• Variable expenses change in proportion to the amount of business a company does

• A fixed expense is an expense that must be paid regardless of sales volume

• A variable expense is part variable and part fixed• The point where revenue equals expenses is called the

break-even point– Break-even analysis

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XPXPUnderstanding Cost-Volume-Profit Relationships

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XPXPWorking with What-If Analysis and Goal SeekTo perform what-if analysis:

– Change the value of a worksheet cell (the input cell)– Observe its impact on one or more calculated cells (the result

cells)

To perform Goal Seek:– In the Data Tools group on the Data tab, click the What-If

Analysis button, and then click Goal Seek– In the Set cell box, select the result cell, and then, in the To

value box, specify its value (goal)– In the By changing cell box, specify the input cell– Click the OK button. The value of the input cell changes to set

the value of the result cell

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XPXPWorking with What-If Analysis and Goal Seek

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XPXPWorking with What-If Analysis and Goal Seek

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XPXPWorking with One-Variable Data Tables• A data table organizes the results of several what-if

analyses within a single table• Insert a formula that references the input cell in the

upper-left cell of the table• Insert input values in either the first row or first column

of the table• For input values in the first row, insert formulas

referencing result cells in the table’s first column; for input values in the first column, insert formulas referencing result cells in the table’s first row

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XPXPWorking with One-Variable Data Tables• Select the table (excluding any row or column

headings). In the Data Tools group on the Data tab, click the What-If Analysis button, and then click Data Table

• If the input values are in the first row, enter the cell reference to the input cell in the Row input cell box; if the input values are in the first column, enter the cell reference to the input cell in the Column input cell box

• Click the OK buttonNew Perspectives on Microsoft Office Excel 2007 10

XPXPWorking with One-Variable Data Tables

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XPXPWorking with Two-Variable Data Tables• A two-variable data table uses two input cells, but

unlike a one variable data table, only the value of a single result cell can be displayed

• Insert a formula that references the result cell in the upper-left cell of the table

• Insert input values in the first row and first column of the table

• Select the table (excluding any row or column headings)• In the Data Tools group on the Data tab, click the What-

If Analysis button, and then click Data Table

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XPXPWorking with Two-Variable Data Tables• Enter the cell reference corresponding to the

input values in the first row in the Row input cell box; enter the cell reference to the input values in the first column in the Column input cell box

• Click the OK button

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XPXPWorking with Two-Variable Data Tables

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XPXPUsing Scenario Manager• Scenario Manager enables you to create as

many scenarios as you want, easily switching between the different scenarios to display the results of several what-if analyses

• Enter the data values in the worksheet for the scenario

• In the Data Tools group on the Data tab, click the What-If Analysis button, and then click Scenario Manager

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XPXPUsing Scenario Manager• Click the Add button in the Scenario Manager dialog box• In the Scenario name box, type a name for the scenario• In the Changing cells box, specify the input or changing

cells• Click the OK button• In the Scenario Values dialog box, specify values for

each of the input cells, clicking the Add button after each

• Click the OK button

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XPXPUsing Scenario Manager

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XPXPCreating a Scenario Summary Report• A scenario summary report lists the values for the

changing cells and result cells under each scenario• In the Data Tools group on the Data tab, click the What-If

Analysis button, and then click Scenario Manager• Click the Summary button• Click the Scenario summary option button to create a

scenario summary report (or click the Scenario PivotTable report option to create a PivotTable describing the scenarios)

• Select the results cells to display in the report• Click the OK button

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XPXPCreating a Scenario Summary Report

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XPXPCreating a Scenario PivotTable Report• A Scenario PivotTable report displays the results

from each scenario as a pivot field in a PivotTable• In the Data Tools group on the Data tab, click the

What-If Analysis button, and then click Scenario Manager

• Click the Summary button, and then click the Scenario PivotTable report option button

• Click the OK button

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XPXPCreating a Scenario PivotTable Report

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XPXPUnderstanding Price Elasticity of Demand

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XPXPUnderstanding Price Elasticity of Demand• The effect that price has on demand is called the

price elasticity of demand– Relatively inelastic– Perfectly inelastic– Relatively elastic– Perfectly elastic– Unit elastic

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XPXPFinding an Optimal Solution Using Solver• Solver is a program that searches for the optimal solution of a

problem involving several variables• Check whether Solver is already installed and activated. If it is,

Solver will appear in Analysis group on the Data tab• Click the Office Button, and then click the Excel Options button• Click Add-Ins in the left pane, and then click the arrow next to the

Manage box and click Excel Add-ins• Click the Go button to open the Add-Ins dialog box• Click the Solver Add-in check box, and then click the OK button.

Follow the remaining prompts to install Solver, if it is not already installed

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XPXPSetting Solver Parameters• In the Analysis group on the Data tab, click the

Solver button• In the Set Target Cell box, specify the target cell• Click the Max, Min, or Value of option buttons to

maximize, minimize, or set the target cell to a specified value

• In the By Changing Cells input box, specify the changing cells

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XPXPSetting Constraints on the Solver Solution• In the Solver Parameters dialog box, click the Add

button• Enter the cell reference of the cell or cells containing the

constraint• Specify the nature of the constraint (<=, =, >=, int, or

bin)• Enter the constraint value in the Constraint box• Click the OK button to add the constraint and return to

the Solver dialog box• Repeat for each constraint you want to add

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XPXPSetting Constraints on the Solver Solution

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XPXPSaving and Loading a Solver Model• To save a Solver model:– Open the Solver dialog box– Click the Options button and then click the Save Model button– Select the range to contain the parameters of the Solver

model, and then click the OK button

• To load a Solver model:– Open the Solver dialog box– Click the Options button and then click the Load Model button– Select the range within the current worksheet containing the

Solver parameters, and then click the OK button

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XPXPSaving and Loading a Solver Model

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XPXPSaving and Loading a Solver Model

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