What – If Analysis

What-if analysis is a process of changing cells' values to see how those changes will affect
the worksheet's outcome. You can use several different sets of values to explore all the
different results in one or more formulas.

What-if Excel is used by almost every data analyst and especially middle to higher
management professionals to make better, faster and more accurate decisions based on data.
What-if analysis is useful in many situations, such as:

o You can propose different budgets based on revenue.

o You can predict the future values based on the given historical values.
o If you expect a certain value due to a formula, you can find different sets of input
values that produce the desired result.

To enable the what-if analysis tool go to the Data menu tab and click on the What-If Analysis
option under the Forecast section.

Now click on the What-If Analysis. Excel has the following What-if analysis tools that can be used
based on the data analysis needs:

o Scenario Manager
o Goal Seek
o Data Tables
Data Tables and Scenarios take sets of input values and project forward to determine possible
results. Goal seek differs from Data Tables and Scenarios in that it takes a result and projects
backward to determine possible input values that produce that result.

Scenario Manager

A scenario is a set of values that Excel saves and can substitute automatically in cells on a
worksheet. Below are the following key features, such as:

o You can create and save different groups of values on a worksheet and then switch to
any of these new scenarios to view different results.
o A scenario can have multiple variables, but it can accommodate only up to 32 values.
o You can also create a scenario summary report, which combines all the scenarios on
one worksheet. For example, you can create several different budget scenarios that
compare various possible income levels and expenses, and then create a report that
lets you compare the scenarios side-by-side.
o Scenario Manager is a dialog box that allows you to save the values as a scenario and
name the scenario.

Goal Seek

o Goal Seek is useful if you want to know the formula's result but unsure what input
value the formula needs to get that result. For example, if you want to borrow a loan
and know the loan amount, tenure of loan and the EMI that you can pay, you can use
Goal Seek to find the interest rate at which you can avail of the loan.
o Goal Seek can be used only with one variable input value.

Data Table

o A Data Table is a range of cells where you can change values in some of the cells and
answer different answers to a problem. For example, you might want to know how
much loan you can afford for a home by analyzing different loan amounts and interest
rates. You can put these different values and the PMT function in a Data Table and
get the desired result.
o A Data Table works only with one or two variables, but it can accept many different
values for those variables.
 #1 Scenario Manager in What-If Analysis

The expected cash flow from this project is $75 million, which is in cell
C2. Total expenses comprise all your fixed and variable expenses, the
total cost is $57.45 million in cell C12. Total profit is $17.55 million in
cell C14, and profit % is 23.40% of your cash inflow.

It is the basic scenario of your project. Now, you need to know the profit
scenario if some of your expenses increase or decrease.

Scenario 1

 In a general case scenario, you have estimated the “Project License” cost
to be $10 million, but you are sure anticipating it to be $15 million
 Raw material costs to be increased by $2.5 million
 Other expenses to be decreased by 50 thousand.

Scenario 2

 The “Project Cost” to be at $20 million

 The “Labor Daily Wages” to be at $5 million
 The “Operating Cost” is to be at $3.5 million
 To create What-If Analysis scenarios, follow the below steps.

1. Go to DATA > What-If Analysis > Scenario Manager.

2. Once you click “Scenario Manager,” it will show you below the dialog
box.

3. Click on “Add.” Then, give “Scenario name.”

4. In changing cells, select the first scenario changes you have listed out.
The changes are Project License (cell C10) at $15 million, Raw
Material Cost (cell C7) at $11 million, and Other Expenses (cell C11)
at $4.5 million. Mention these three cells here.

5. Click on “OK.” It will ask you to mention the new values as listed in
scenario 1.
6. Do not click on “OK” but click on “OK Add.” It will save this scenario
for you.
7. Now, it will ask you to create one more scenario. As we listed in
scenario 2, make the changes. This time we need to change Project
Cost (C10), Labour Cost (C8), and Operating Cost (C9).

8. Now, add new values here.

9. Now click on “OK.” It will show all the scenarios we have created.

10. Click on “Scenario summary.” It will ask you which result cells
you want to change. Here, we need to change the Total Expense Cell
(C12), Total Profit Cell (C14), and Profit % cell (C16).
11. Click on “OK.” It will create a summary report for you in the
new worksheet.
 #2 Goal Seek in What-If Analysis

Dhoni is a class 10th student. His target is to achieve an average score of

85 in the final exam. He has already completed 5 exams and left with only
1 exam. Therefore, in the completed 5 exams.

To calculate the current average, apply the average formula in the B7 cell.

The current average is 82.2.

DHONI’s GOAL is 85. His current average is 82.2. He is short by 3.8 with
one exam.

Now, the question is how much he has to score in the final exam to
eventually get an overall average of 85. It can be found by the What-If
Analysis GOAL SEEK tool.

 Step 1: Go to DATA > What-If Analysis > Goal Seek.

 Step 2: It will show you below the dialog box.

 Step 3: Here, we need to set the cell first. “Set cell” is nothing but which
cell we need for the final result, i.e., our overall average cell (B7). Next is
“To value.” Again, Dhoni’s overall average GOAL is nothing but for what
value we need to set the cell (85).

The next and final step is changing which cell you want to see the impact
on. So, we need to change cell B6, the cell for the final subject’s score.
 Step 4: Click on “OK.” Excel will take a few seconds to complete the
process, but it eventually shows the result like the one below.

Now, we have our results here. To get an overall average of 85, Dhoni has
to score 99 in the final exam.
#3 Data Table in What-If Analysis
Assume you are selling 1,000 products at ₹15, your total anticipated
expense is ₹12,500, and your profit is ₹2,500.

You are not happy with the profit you are getting. Your anticipated profit
is ₹7,500. You have decided to increase your per-unit price to increase
your profit, but you do not know how much you need to increase.

Data tables can help you. Create a table below.

Now, in the cell, F1 links to the “Total Profit” cell, B6.

 Step 1: Select the newly created table.

 Step 2: Go to DATA > What-if Analysis > Data Table.

 Step 3: Now, you will see below dialog box.

 Step 4: Since we are showing the result vertically, leave the ”Row input
cell.” In the “Column input cell,” select cell B2, which is the original
selling price.

 Step 5: Click on “OK” to get the results. It will list out profit numbers in
the new table.

So, we have our Data Table ready. To profit from ₹7,500, you need to sell
at ₹20 per unit.