Demo: Check that hunch with Excel "what-if" scenarios

Work Essentials: [title] Play Demo Play demo button

Can't play the demo?

Help launching simulation Troubleshooting tips

You may experience a delay while the demo is loading.

I wonder how our net profit would be affected if we could reduce our variable cost per unit by just a few cents. How much could we save if we found a lower interest rate? Wouldn’t it be nice to be able to play around with some scenarios, do some "what-ifs" — without messing up your current data? It’s easy with Microsoft Office Excel 2003. You can set up “scenarios” to experiment with the data and compare the possibilities. Who knows? It could be a road map to better solutions for your business.

 Note   For screen reader text detailing the content of the video and a screen reader version of the audio script, click Demo text version.

ShowDemo text version

Screen Action Audio Script
Excel 2003 is open showing a breakeven analysis worksheet. The pointer starts on cell B2, Price per unit, and then it moves between the breakeven analysis variable and result cells.

Projecting future values can be an important part of the decision-making process.

To get a clear picture of the possibilities, you may want to project more than one set of values and see how they affect your results.

You can do this easily with "what-if" scenarios in Excel 2003.

The pointer clicks the Tools menu, and then clicks Scenarios, causing the Scenario Manager dialog box to open. With Lowest Price selected in the Scenarios list, the pointer clicks Add, causing the Add Scenario dialog box to open. The pointer moves to the Scenario name box, and the phrase Profit Analysis is typed.

Here, I want to do a breakeven analysis to see how lowering the price and increasing our projected unit sales will affect our profit margins.

So I’ll define a scenario and call it Profit Analysis.

The pointer clicks the icon to the right of the Changing cells box, which causes the Add Scenario – Changing cells dialog box to open. The pointer moves to the worksheet, clicks cell B2 and then cell B3, and then clicks the icon on the right side of the Add Scenario – Changing cells dialog box to go to the Edit Scenario dialog box. The pointer then clicks OK. I’ll select the values that I want to modify — in this case, the Price per Unit and Unit Sales.
The Scenario Values dialog box opens. The pointer moves to the first box, labeled $B$2, and 6.25 is typed.

Now, I’ll enter the values for each changing cell.

I’ll lower the unit price to 6.25 …

The pointer moves to the second box, labeled $B$3, and the value is changed to 110000. … and increase our unit sales to 110,000 units.
The pointer clicks OK, and the Scenario Manager dialog box opens. With Profit Analysis selected in the Scenarios list, the pointer clicks Show, and then clicks Close, causing the dialog box to disappear.

I can easily see the outcome of this scenario by clicking Show.

It’s clear that lowering the price and increasing the unit sales would result in a lower profit margin.

The pointer moves to Price per unit and then to Profit Margin, and then clicks the Edit menu and the Undo Show command. That’s not the result that I’m looking for.
The pointer clicks the Tools menu, and then clicks Scenarios, causing the Scenario Manager dialog box to open. I’ll discard these numbers and run new ones in the Scenario manager.
With Profit Analysis selected in the Scenarios list, the pointer clicks Summary, and the Scenario Summary dialog box opens. With Scenario summary selected, the pointer clicks OK, causing the Scenario Summary to appear in a new worksheet.

I just click the Summary button …

… and Excel runs through the various scenarios and displays the results on my worksheet.

The Scenario Summary shows the results of all the scenarios. With Excel 2003, I can easily project future values in order to improve my bottom line.
Excel 2003 disappears. The animated text Experience your own great moments appears. Under it appears a URL: http://www.microsoft.com/office.
 
 
Applies to:
Excel 2003