This mini-masterclass with Financial Modelling in Excel specialist Danielle Stein Fairhurst shows various techniques for building scenarios into financial models. This session explores how to reduce uncertainty in decision-making with sensitivity and scenario analysis techniques, applying in-built standard spreadsheet tools, and understanding the inputs, assumptions and drivers when creating forecasts.
Discussion includes identifying best practices for dealing with the unknown, while utilising several different methods to perform scenario and sensitivity analysis in Excel models with the goal of reducing volatility and mitigating risk;
- Scenarios, Sensitivity & What-if Analysis; What’s the difference?
- Technical methods of scenario analysis in Excel + demo
- Key advantages and disadvantages of each method
Topics
Covered in this mini-masterclass:
- 3:11 What is a financial model?
- 4:25 Is it a spreadsheet or a financial model?
- 6:21 What’s the difference between sensitivities, scenarios and what-if analysis?
- 9:35 Manual Scenario selection (Data validation dropdown & Combo box dropdown)
- 13:10 Scenario Manager
- 14:27 Data Tables
- 18:57 Goal Seek (What-if Analysis)
- 21:01 Advantages and disadvantages of scenario methods
- 26:58 Statistical background for Monte Carlo simulations
- 29:52 Building a Monte Carlo (Stochastic) Simulation in Excel
Resources
Download the Excel File to follow along with the demonstration.
