Day 29: What-If Analysis Tools in Excel – Goal Seek, Data Tables, and Scenario Manager

Day 29: What-If Analysis Tools in Excel – Goal Seek, Data Tables, and Scenario Manager

Welcome to Day 29 of your 50-day Excel learning journey! Yesterday, we built an interactive dashboard using Power Pivot. Today, we’ll explore What-If Analysis tools—essential for advanced data modeling and decision-making.

These tools let you experiment with different scenarios, solve problems, and make data-driven predictions. Whether you’re calculating sales targets, testing financial models, or planning budgets, What-If Analysis can save you time and provide insights. Let’s dive in!

What is What-If Analysis?

What-If Analysis allows you to test various scenarios by changing inputs to see how they affect outcomes. Excel provides three primary tools for this purpose:

  1. Goal Seek: Finds the input value needed to achieve a specific result.
  2. Data Tables: Displays how changing one or two variables affects a formula.
  3. Scenario Manager: Compares multiple "what-if" scenarios.

1. Goal Seek

Goal Seek determines the input value needed to achieve a desired result in a formula.

Example Use Case: Break-Even Analysis

Suppose you sell a product for $20 each, and your total fixed costs are $5,000. You want to determine how many units you need to sell to break even.

Steps:

  1. Enter the following in Excel:

    • Selling Price: $20 (in B1)
    • Fixed Costs: $5,000 (in B2)
    • Units Sold: 0 (in B3)
    • Total Revenue Formula: =B1*B3 (in B4)
    • Break-Even Formula: =B4-B2 (in B5).

  2. Go to Data > What-If Analysis > Goal Seek.

  3. In the Goal Seek dialog box:

    • Set Set Cell to B5 (Break-Even Formula).
    • Set To Value to 0.
    • Set By Changing Cell to B3 (Units Sold).

  4. Click OK.

Result: Excel calculates the number of units needed to break even.

2. Data Tables

Data Tables allow you to see how changing one or two variables impacts a formula.

Example Use Case: Loan Repayment Analysis

You want to analyze how different interest rates affect monthly loan payments.

Steps for a One-Variable Data Table:

  1. Enter the following:

    • Loan Amount: $100,000 (B1)
    • Loan Term (Years): 10 (B2)
    • Interest Rate: 5% (B3)
    • Monthly Payment Formula: =PMT(B3/12, B2*12, -B1) (B4).

  2. Create a column of interest rates (e.g., 4%, 5%, 6%) in range D2:D5.

  3. In E1, type "Monthly Payment."

  4. In E2, link to the formula in B4 (=B4).

  5. Select the range D1:E5, go to Data > What-If Analysis > Data Table, and specify:

    • Column Input Cell: B3 (Interest Rate).

  6. Click OK.

Result: Excel calculates the monthly payment for each interest rate.

Steps for a Two-Variable Data Table:

If you also want to vary the loan term:

  1. Create a table with interest rates in the first column (D2:D5) and loan terms (e.g., 10, 15, 20 years) in the first row (E1:G1).
  2. Link the top-left cell of the table (D1) to the formula in B4 (=B4).
  3. Select the table range and go to Data Table, specifying:
    • Row Input Cell: B2 (Loan Term).
    • Column Input Cell: B3 (Interest Rate).
  4. Click OK.

Result: Excel calculates payments for all combinations of interest rates and loan terms.

3. Scenario Manager

Scenario Manager allows you to compare multiple "what-if" scenarios by changing several variables simultaneously.

Example Use Case: Sales Forecasting

You want to compare revenue under different sales conditions:

  • Best Case: High sales and low costs.
  • Worst Case: Low sales and high costs.
  • Base Case: Average sales and costs.

Steps:

  1. Create the following:

    • Price per Unit: $20 (B1).
    • Units Sold: 500 (B2).
    • Variable Costs per Unit: $8 (B3).
    • Fixed Costs: $5,000 (B4).
    • Profit Formula: =(B1*B2) - (B2*B3) - B4 (B5).

  2. Go to Data > What-If Analysis > Scenario Manager.

  3. Click Add to define scenarios:

    • Best Case: Set Units Sold to 600 and Variable Costs to $6.
    • Worst Case: Set Units Sold to 400 and Variable Costs to $10.
    • Base Case: Leave values as is.

  4. Click Show to view the results for each scenario.

Result: Excel updates the profit calculation for each scenario.

Practical Exercise

Scenario: Analyze Profit with Different Variables

Use the following dataset:

Variable Base Value
Price per Unit $20
Units Sold 500
Variable Costs per Unit $8
Fixed Costs $5,000
  1. Use Goal Seek to find how many units must be sold to achieve a profit of $10,000.
  2. Create a One-Variable Data Table to analyze how changing the price per unit affects profit.
  3. Use Scenario Manager to compare profit under different sales scenarios.

Pro Tips for What-If Analysis

  • Save Scenarios: Use Scenario Manager to save and quickly switch between different scenarios.
  • Use Dynamic Formulas: Link all variables to formulas for easy updates.
  • Combine Tools: Use Goal Seek within Scenario Manager for even deeper insights.

Common Mistakes to Avoid

  • Hardcoding Values: Use cell references instead of typing values directly into formulas.
  • Forgetting Dependencies: Ensure all related calculations are linked.
  • Overcomplicating Models: Start simple and layer complexity as needed.

What’s Next?

Fantastic job mastering What-If Analysis tools! Tomorrow, on Day 30, we’ll explore Solver, an advanced optimization tool for solving complex problems like maximizing profits or minimizing costs.

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