EXCEL CHAPTER 5

PERFORMING SENSITIVITY
ANALYSIS & NAMING RANGES
OF A WORKSHEET

Sensitivity Analysis and

Microsoft Excel
Off-sheet Variables
Placement of the Data Input Section
Using Absolute Addressing
Referencing Cell Addresses of the Significant Assumptions
in the Main Section of the Worksheet
Year 2010 Sales & Annual Rate of Sales Growth
Cost of Sales
Selling Expenses
General and Administrative Expenses
Year 2010 Other Expenses and Annual Growth
Provision for Income Taxes
Performing Sensitivity Analysis

Data Input Section

Relative vs. Absolute Cell Addresses

in Formulas and Functions
Relative Cell Addresses:
Relative cell addresses in formulas or functions
change as the formula or function is copied to
other cells.
Absolute Cell Addresses:
Absolute cell addresses in formulas or functions
do not change as the formula or function is
copied to other cells.

Sales
Replace the 250000 in cell B7 with =AB53 from
the Data Input Section.
Replace the =ROUND(B7*(1+.12),0) in cell C7
with =ROUND(B7*(1+$AB$54).
Be sure to change cell address AB54 from relative
(the default) to absolute by clicking on the F4 key
when the cell pointer is immediately before, on, or
immediately after that cell address.
Copy the function and formula in cell C7 to cells
D7 to F7.

Cost of Sales
Replace the =ROUND(B7*.4,0) in cell B8 with
=Round(B7*$AB$55).
Be sure to change cell address AB55 from relative
(the default) to absolute by clicking on the F4 key
when the cell pointer is immediately before, on, or
immediately after that cell address.
Copy the function and formula in cell C8 to cells
D8 to F8.

Selling Expenses
Replace the =ROUND(B7*.23,0) in cell B13 with
=Round(B7*$AB$56).
Be sure to change cell address AB56 from relative
(the default) to absolute by clicking on the F4 key
when the cell pointer is immediately before, on, or
immediately after that cell address.
Copy the function and formula in cell B13 to cells
C13 to F13.

General & Admn Expenses

Replace the
=ROUND(IF(B7*0.14>40000, B7*0.14, 40000), 0)
in cell B14 with
=ROUND(IF(B7*$AB$57>$AB$58, B7*$AB$57, $AB$58), 0)

Be sure to change cell addresses AB57 and AB58 from

relative (the default) to absolute by clicking on the F4 key
when the cell pointer is immediately before, on, or
immediately after those cell addresses.
Copy the function and formula in cell B14 to cells C14 to
F14.

Other Expenses
Replace the 20000 in cell B15 with =AB59.
Because this formula does not include
multiplication or division, it is not necessary to
round it.
Also, because this formula will not be copied to
other cells, there is no need to change cell
address AB59 from relative to absolute.

Other Expenses
Replace the =B15+1500 in cell C15 with =B15+
$AB$59.
Be sure to change cell address AB56 from relative
(the default) to absolute by clicking on the F4 key
when the cell pointer is immediately before, on, or
immediately after that cell address.
Copy the formula in cell C15 to cells D15 to F15.

Provision for Income Taxes

Replace the =ROUND(B18*.2,0) in cell B19 with
=ROUND(B18*$AB$61,0).
Be sure to change cell address AB61 from relative
(the default) to absolute by clicking on the F4 key
when the cell pointer is immediately before, on, or
immediately after that cell address.
Copy the function and formula in cell B19 to cells
C19 to F19.

Working in Multiple Windows to a

Workbook

Using Scenarios in
Sensitivity Analysis
Creating Scenarios with the Scenario Manager
Performing Other Tasks with the Scenario Manager
Editing Scenarios
Deleting Scenarios
Creating a Scenario Summary Report
Protecting and Hiding Scenarios (Click on the What If
Analysis button in the Data Tools group of the Data tabs
Ribbon, click on Scenario Manager to display the Scenario
Manager dialog box, and then click on Edit) Must
subsequently enable worksheet protection by clicking on the
Protect Sheet button in the Changes group of the Review
tabs Ribbon.

Scenarios
Most Likely, Best Case, Worst Case
First Year Sales

$250,000

$300,000

$225,000

Annual Sales Growth Rate

12.0%

15.0%

10.0%

Cost of Sales as a Percent of Sales

40.0%

38.0%

45.0%

Selling Expenses as a Percent of Sales

23.0%

22.0%

24.0%

Gen & Admn Exp - Maximum as % of Sales

14.0%

12.0%

15.0%

Gen & Admn Exp Minimum Dollar Amount

$40,000

$35,000

$45,000

First Year Other Expenses

$20,000

$18,000

$22,000

Annual Dollar Increase in Other Expenses

$1,500

$1,200

$1,800

Prov for Income Taxes as % of Income from

Operations

20.0%

17.5%

22.0%

Using Scenarios in
Sensitivity Analysis
Performing Other Tasks with the Scenario Manager
Edit Scenarios
Delete Scenarios
Create a Scenario Summary Report
Protecting and Hiding Scenarios (Click on the What If
Analysis button in the Data Tools group of the Data
tabs Ribbon, click on Scenario Manager to display the
Scenario Manager dialog box, and then click on Edit)
Must subsequently enable worksheet protection by
clicking on the Protect Sheet button in the Changes
group of the Review tabs Ribbon.

Watch Window
Excel Watch Window lets you monitor several
cells in a small, always-on-top window, even when
those cells are in other workbooks of the
spreadsheet or off the screen in the current
workbook.

Monitor the Values of Cells in

the Watch Window
Select the cells you want to watch. For example, assume that
you want to monitor the effects of changes in assumptions on the
Net Income values. Accordingly, select the range B21:F21.
Click on the Watch Window button in the Formula Auditing
group of the Formulas tabs Ribbon.
Click on Add Watch in the Watch Window. Excel will display a
list box that identifies the cell or the range cells to be viewed in
the Watch Window.
Click on Add in the list box to add the range to the Watch
Window. When you click on Add, Excel closes the list box and
displays several columns of information, including values, about
the selected cells in the Watch Window.

Naming Cells and Ranges

Creating Names with Name Box:
Data_Input
Creating and Deleting Names with the Name
Manager box in the Defined Names group of the
Formulas tabs Ribbon.
Report
Total_Sales

Using Named Ranges

Selecting a Range by Choosing its Name in the
Name Box.
Selecting a Range by Choosing its Name with the
F5 key.
Using Names with Functions.
Using Names with the Page Setup dialog box.

Save Your Workbook