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Summary

When sensitivity scenarios are included in a business case package, management obtains a better overall feel for the project under review. The analyst who constructs the business case also has the opportunity to answer pertinent “what if” questions proactively. It provides multiple points of view on a project, and enables the review team to focus on the business drivers that have the most significant impact on potential outcomes.

In this chapter, you have learned how to use Excel's Scenario Manager to establish and examine the effect of variances in the input assumptions of a business case, as well as how to establish upper and lower limits on the sensitivity of the business case's outputs. You have extended your understanding of profitability indicators to different ways of measuring the rate of return, and have learned a quicker (although less powerful) means of optimizing a value by means of Goal Seek. Chapter 14, “Planning Profits,” examines the effect that changing the relationship between your fixed and variable costs, as well as the effect of borrowing, has on the profitability of your enterprise.


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