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Solving What-If Problems

One of Excel’s great features is that it allows you to solve “what-if” problems, situations in which you try to gauge future trends by changing variables such as operating assumptions or profit margins. Whether you need to look at best-case and worst-case scenarios or find the best solution given a specific set of circumstances, Excel has the tools to help you get the answer you need. Two of the “what-if” options you’ll probably use the most are Excel Scenario and Goal Seek functions.

Creating Scenarios

Examining different scenarios is one type of what-if analysis you might often use in business settings. Perhaps you want to see what your gross profit would be under conditions of low, medium, and high sales volume, or forecast the effect that various levels of employee turnover might have on overall productivity given certain assumptions about resources required to replace staff. In cases like these, it is often helpful to create scenarios for the different possibilities and then present them in a summary table, like the one shown in Figure 9-10. You can create a set of scenarios by following these steps.


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