Sensitivity analysis is one of the most important tools in financial analysis. It allows you to quickly modify model inputs to see how the company you’re modeling will react. For example, what might happen if sales growth increased…or if margins declined?
A quick and painless way to run multiple scenarios without having to manually change each input each time is Excel Data Tables. Take a look at the video below for a quick and painless way to run sensitivity analyses.
Note: To access Data Tables in Excel: Press ALT + A to get to the DAta menu. Then W for What-if-Analysis. Then T for Data Tables. Remember, the Row Input Cell is the cell in your model into which you would type the inputs in the top row of your Data Table if you were testing each value separately. The Column Input Cell is the the cell in your model into which you would type the inputs in the left column of your Data Table if you were testing each value separately.
