Creating and Using Scenarios in Excel
Scenarios in Excel are a powerful tool for what-if analysis, allowing you to model different sets of assumptions and see their impact on your data. This webpage will cover five key concepts related to creating and using scenarios: Scenario Manager, Adding Scenarios, Modifying Scenarios, Deleting Scenarios, and Scenario Summary.
1. Scenario Manager
The Scenario Manager is a feature in Excel that allows you to create, edit, and analyze multiple scenarios. It helps you compare different sets of data inputs and understand how they affect your results. To access the Scenario Manager, go to the "Data" tab, click on "What-If Analysis", and select "Scenario Manager".
Example: Suppose you are planning a budget and want to compare different scenarios based on varying income and expense estimates. You can use the Scenario Manager to create scenarios for "Best Case", "Worst Case", and "Most Likely Case".
2. Adding Scenarios
Adding scenarios involves defining a set of input values for a specific scenario. Each scenario can have its own set of variables, such as sales figures, costs, or interest rates. To add a scenario, open the Scenario Manager, click "Add", and provide a name for the scenario. Then, specify the changing cells and their values.
Example: For your budget planning, you might add a scenario named "Best Case" with high income estimates and low expense estimates. In the Scenario Manager, click "Add", name the scenario "Best Case", and set the values for income and expenses accordingly.
3. Modifying Scenarios
Modifying scenarios allows you to update the input values for existing scenarios. This is useful when your assumptions change or when you need to refine your analysis. To modify a scenario, select it in the Scenario Manager, click "Edit", and adjust the values as needed.
Example: If your "Best Case" scenario needs to account for a new expense, you can modify the scenario by selecting it in the Scenario Manager, clicking "Edit", and updating the expense values.
4. Deleting Scenarios
Deleting scenarios is necessary when a scenario is no longer relevant or when you want to clean up your analysis. To delete a scenario, select it in the Scenario Manager and click "Delete". Be cautious when deleting scenarios, as this action cannot be undone.
Example: If you no longer need the "Worst Case" scenario in your budget planning, you can delete it by selecting it in the Scenario Manager and clicking "Delete".
5. Scenario Summary
The Scenario Summary provides a consolidated view of all your scenarios, showing how different inputs affect your results. This summary helps you compare scenarios side by side and make informed decisions. To create a Scenario Summary, click "Summary" in the Scenario Manager and specify the result cells you want to include.
Example: After creating your "Best Case", "Worst Case", and "Most Likely Case" scenarios, you can generate a Scenario Summary to see how each scenario impacts your budget's net profit. Click "Summary" in the Scenario Manager and select the cell that contains your net profit calculation.