instructions for operation of excel sensitivity and scenario analysis used in the course

Instructions for Operation of Excel Sensitivity and Scenario Analysis

Used in the Course

Financial Modeling Workbook 2

Introduction

This file provides instructions on various excel techniques and macros. The excel functions and macros described are related to financial modeling applications. Practical step by step instructions are provided and helpful hints from actual applications are emphasized.

There are a number of excel files that go with the discussion of each subject. These exercises are in the “excel exercises” folder of your CD.

As explained on the next slide, if you would like to find a particular subject, use the CNTL, F key.


Finding things in the Manual

To Find Item us CNTL F

For example, if you would like to find discussion of how to add sheets in macros, look for the word “sheets”:

Use CNTL F

Type sheets


Creating a Scenario Analysis

The data tables described above does not allow you to adjust a series of variables and present a series of outputs. You can create an effective scenario analysis using the following excel tools:

-The index command-Data tables-Combo Box


Step by Step Process for A Scenario Analysis

The following step by step process can be used to develop a scenario analysis:

1. Type in input data for multiple cases2. Select output variables and place a link to the variables to

the right and above the input data3. Type row numbers for each case and then type a row

number for case selection4. Use the index command to select the appropriate scenario5. Link INPUT variables in the model sheet to the result of the

INDEX command above6. Create a DATA TABLE using the scenario row as the

COLUMN INDEX7. Present the scenario analysis with a COMBO box and a

graph


Step 1: Inputting Data

The first step is inputting data in a set of rows with each row corresponding to a scenario. First enter the case number and then input variables corresponding to each case.

Other than the scenario name each item is simply input


Step 2: Select Output VariablesIn second step select a series of output variables.

The output variables must be one row above and one column to the right of the data inputs.

The output variables can be a series of income or cash flow variables for each year of the model.

Here, each output variable comes from the financial model


Step 3: Input a Scenario Number

The next step is to enter a row number that will be used to select the scenario. To begin simply type in a row number somewhere in the sheet.


Step 4: Use the Index Function to Select the Scenario

Use the index function and select only one column. Use column series and fix the row number as follows when entering the index command.INDEX(Column series,Fixed Row #)

The index command selects the entire row number for the row number selected


Step 5: Link the Input Variables to the Index Row

This may be the most confusing part of the process. You should go to the model and then put an = sign in the input variables that links to the index row of the scenario table

Link the input variable to the scenario sheet


Check of Analysis After Step 5

To make sure the analysis is working, change the row number that you input and the variables should change. This is illustrated below

When you change the row number, all of the output variables should change after you linked the variables


Step 6a: Type in the Row Numbers to Set-up the Data Table

In the next step, you should manually type in the row numbers in the column to the right of the input data. This will allow you to make a data table that uses the row number as the column input.

Type in the row number of the scenario between the input and the output parts


Step 6: Create a Data Table

In this step, shade the area that includes the row numbers and all of the output variables. Then use the data, table menu and enter the row number as the column input as shown below.

The column number for the data table is the row number input


Completed Scenario Analysis

The table below illustrates the scenario analysis where the inputs is shown next to the output


Making a Graph with Scenario Analysis

To make a graph with scenario analysis, follow the following steps:

1 Shade the first two rows and make a graph

3 In the series part of the graph, link the series names to the scenarios

4 Make a title on the graph from the top of the data table

5 Make a combo box to show alternative scenarios


Graph Step 1

Shade the first two rows. This will compare the fixed base case on the second row with other rows.

Shade and then press F11


Graph Step 2: Series Names from Scenario Inputs

Right click on the graph and then link the first name to the index value and link the second name to the base case.


Graph Step 3: Enter the Chart Title

Enter the chart title using the same process as described in the break-even section


Graph Step 4: Create a Combo Box

Create a combo box with range names as and copy the combo box to the graph. The cell link is the row number and the input range is the list of scenarios

Creating a Tornado Diagram

This shows a step by step process to create a tornado diagram


Use data from the scenario analysis and Re-create the INDEX Function

1. Set up a scenario analysis using the INDEX function together with the data table as described above, where the column is used in the INDEX together with the scenario number. This has two objectives. First, it allows you to maintain the scenario analysis. Second it provides a basis for creating data for the tornado diagram.


Similar to the Index function in the scenario analysis

Create an Option Button

2. Add a form control that allows one to select between a scenario analysis and a tornado diagram (You can use option buttons where you insert a button and then select a cell link. The option buttons work well with the CHOOSE function in excel).


Enter the Variable Number

3. Add an input for a variable number and enter numbers across each of the variables. The variable number can be entered near the scenario number that was used in the scenario analysis and the number for each variable can be entered above or below the variable title.


Variable Number

Code Number for each variable

Add TRUE/FALSE Switch VariableBelow the INDEX computation, add a variable that includes a true/false test for whether the variable in the table is the same as the variable number input. For example, say there are six variables as illustrated in the diagram above. There should be a list of numbers from one to six above the variables. The test evaluates whether the input number for the variable number equals the number associated with the variable. There is only one value that is TRUE for the list of variables. The formula for the test should use the F4 key for the variable number and compare this to each formula as illustrated below:

Variable Number Input (Fixed with F4) = Number Associated with Each Variable


Add IF test that uses either BASE CASE or Selected Scenario with INDEX

5. Create an IF function using the test variable. If the variable is true, then use the value from the INDEX function discussed in step 3 above. If the variable is false, then use the base case value. Using this approach, every variable remains at the base case value except the variable which equals the variable number input. The IF test has the form illustrated below:

IF(TRUE/FALSE Test, INDEX from Step 3, Base Case from Scenario Table)


Use the Choose Variable to Link Variables to Model as with Scenario

6. Use the CHOOSE variable together with the cell link described in step 2 to select either the INDEX value – for the scenario option, or the IF function – for the tornado option. The values in this part of the analysis should drive the financial model. An illustration of this part of setting up a tornado diagram is illustrated in the excerpt below. The last line in the table is used in the input section of the financial model.


Scenario Number 2Variable Number 2 2Shares Issued 5,000.00 Premium 40%

12.78% 13.49% 9.36% 10.12% 17,769.60

Traffic per Store

Margin per Store

Cap Exp per New Store

Growth Rate in Stores

Cost Synergy Percent

IRR on Equity - PE Ratio

IRR on Equity - M/B Ratio

Overall IRR on Free Cash Flow

5-Year Average Accretion

DCF Value - Equity

1 2 3 4 5Base Case 230,000.0 30.0% 850,000 4.50% 10.00% 1 13.3% 14.0% 9.8% 12.4% 19,049.43 Low Case 210,000.0 29.0% 930,000 3.00% 0.00% 2 5.8% 7.3% 5.1% -13.0% 7,479.95 High Case 250,000.0 33.0% 800,000 6.00% 15.00% 3 18.3% 18.7% 14.1% 29.4% 32,683.48 Worst Case 210,000.0 28.0% 930,000 2.00% 0.00% 4 3.9% 6.0% 4.4% -14.3% 6,728.93

Index Function 210,000.0 29.0% 930,000 3.00% 0.00% =INDEX(H12:H15,Scenario_Number)Test FALSE TRUE FALSE FALSE FALSE =$D$4=H11If Test 230,000.0 29.0% 850,000 4.50% 10.00% =IF(H18,H17,H12)

Low Case 230,000.0 29.0% 850,000 4.50% 10.00% =CHOOSE($I$4,H17,H19)

Run TableScenario

Tornado

Create a Two Way Data Table

7. After setting up the variable using both IF test that runs one variable at a time, set up a two way data table where one of the variables represents the variable number and a second variable represents the scenario number for the base case, low case and high case. The form of this two way data table is illustrated below:


1 2 3 4 5123

Variable Number

Sc

Num

Compute Low vs. Base and High vs. Base

9. For the first row, the base case output is simply repeated for in each case. Once the table is computed, the base case versus the low case and the base case versus the high case can be computed by simply subtracting the low case row from the base case row and by subtracting the high case row from the base case row. This presents the impacts of different variables which is the basis for the tornado diagram. All that is left to do is to present the data. An illustration of this step is shown below. You can see that the variable with the largest effect if variable number 5 and the second largest is variable number 2 with variable number 3 coming in last place.


1 2 3 4 51 13.3% 13.3% 13.3% 13.3% 13.3%2 11.4% 12.8% 12.9% 12.8% 10.8%3 14.9% 14.8% 13.6% 13.9% 14.5%

Low vs Base -1.9% -0.6% -0.5% -0.5% -2.6%High vs Base 1.6% 1.5% 0.3% 0.5% 1.2%Absolute Value 3.5% 2.1% 0.8% 1.0% 3.7%

Variable Number

Sc N

um

Sort Using the SMALL Function

12. To sort a variable one can use the SMALL function or the LARGE function. In this case use the SMALL function with the absolute value shown in the table above. The mechanics of the small function is illustrated below:

SMALL(Fixed Row to Sort (Absolute Value from Table Above), Variable Number)


Low vs Base -1.9% -0.6% -0.5% -0.5% -2.6% =H27-H26High vs Base 1.6% 1.5% 0.3% 0.5% 1.2% =H28-H26Absolute Value 3.5% 2.1% 0.8% 1.0% 3.7% =H33-H32

Small 0.8% 1.0% 2.1% 3.5% 3.7% =SMALL($D$34:$H$34,H25)

Create a Sort Key with the MATCH Function

13. Match the sorted variable against the original absolute value line so as to establish a sort key that can be used in with the INDEX function to extract sorted variables. When computing the sort key, use the MATCH function so as to create an exact match. To do this enter a zero as the match type as illustrated below:

MATCH(Sorted Single Value, Unsorted Values -- Fixed, 0)


Absolute Value 3.5% 2.1% 0.8% 1.0% 3.7% =H33-H32

Small 0.8% 1.0% 2.1% 3.5% 3.7% =SMALL($D$34:$H$34,H25)Match 3 4 2 1 5 =MATCH(H36,$D$34:$H$34,0)

Single variableUnsorted Values

Use Sort Key and INDEX Function to Structure Variables for Graphing

14. To create a graph, you will need the title of each variable as the x-axis and the low versus the base and the high versus the base. To set-up the data for making a graph, use the INDEX function along with the sort key. For example, to find the title, enter the original titles (fixed with the F4 key) in the index command and use the sort key as the column number (you do not need a row number) as illustrated below:

INDEX(Original Series of Titles – Fixed, Sort Key)


Create Graph with F11 Key

15. Graph the sorted variables using the F11 function and change to a stacked bar chart (make sure that there is no caption next to the titles so the excel will know that this is the x-axis.


-3.00% -2.50% -2.00% -1.50% -1.00% -0.50% 0.00% 0.50% 1.00% 1.50% 2.00%

Cap Exp per New Store

Growth Rate in Stores

Margin per Store

Traffic per Store

Cost Synergy Percent

Low vs Base

High vs Base


Combo Box for Scenario Analysis

• The combo box is an effective way to manage scenario analysis – it is better than the data validation.

• Examples• You want a series of oil prices (base case,

downside case, upside case) and the price vary year by year.

• You want to establish a series of scenarios – downside, upside, etc.

• You want to create sensitivity analysis on variables – e.g. change the interest rate from 5% to 10% by 1%.


Use of Combo Box

The combo box can be used effectively with range names if you want a fancier list box. Steps:

1. Find combo box from the view toolbars, forms menu.

2. Use an range name and the format control to assign the list (you could do this without a range name, but a range name works well).

3. Assign a cell to link the number of the selection to. This puts the number of the selection in a cell

4. Use the index, offset or choose command and the range name to find the name and use it elsewhere


Starting the Combo Box

As with the other commands, it all starts with the View, Toolbars, Forms:

• Find the Combo Box• Click the Combo Box Selection (a plus

sign appears)• Drag the plus sign to make the combo

box appear


Combo Box and Choose or Index

In these examples, the combo box is used with the choose command or the index command to run scenarios.

Note that when the cell link is used, the cell link can be changed independently (without the combo box) and the selection of the combo box will change.

Multiple combo boxes can refer to the same cell link – so you can change the scenario from multiple locations in the spreadsheet


IndexThe index command is related to the cells command in the macro discussion below. It can be used to find the value of a cell in a table. The syntax is cell(table,row,col)

Index(range_name,1,1)Index(matrix,5,5)

Use of Index with range name


Choose

The choose function is helpful for scenario analysis.

o Input a number that defines a scenario

o The choose command will choose the row out of a table depending on the scenario choosen


Choose

Choose(index,number …)

Use of Choose Command with range names to Select the

Scenario


Combo Box and Offset Example

Use the Combo Box to Find the Row Number of the Option

Use the Offset Command with anchor and the number for the row offset. The column offset is zero and the size is 1,1.

Offset(Anchor Cell, Rows Down, 0,1,1)


Getting Back the Combo Box Information with the Index Command

When you use a combo box, you often want the result of the combo box in a cell for presentation, sensitivity analysis, graphs etc.

To do this, use the index command, where the range is the range that you used for setting-up the combo box and the row or column number in the index function is the cell reference

Example: index(range,row number)


Combo Box Notes

Works well with the offset command – the cell link can tell you how many rows to go down or how many columns to go across

The range name in the combo box must be vertical. You can use the transpose function explained below to convert from horizontal to vertical.

Caution: You need to have the input range for display in columns rather than rows.


Combo Box Hints and Warnings

If you use range names in a combo box, excel does not automatically pick-up the combo box – you must type the range name directly.

Range names are effective in combo boxes because the range names allow you to copy the combo boxes to other sheets (otherwise you cannot copy the boxes)

You can use the Shift, Cntl, Spacebar to copy multiple boxes to another sheet


Combo Box Warnings

• Sometimes, you want the cell link of the combo box to be a formula rather than a fixed number.

• Be very careful with this, because when you run the combo box, the formula is lost.

• To solve this problem, make another cell and use an if test or a choose command to solve the problem.

• Another solution to the problem is to attach a macro to the combo box (this also applies to the spinner box and the scroll bars).


Option Buttons

Option Buttons can be useful if there are a set of different options (more than only a true and false). When you put multiple option buttons into your sheet, only one is selected.


Option and Check-Box Example

T

Option buttons attached to a simple macro that moves to a different part of the sheet


Attaching a Macro to a Scroll Bar and a Spinner Box

• Quite often, the scroll bar or the spinner box is used along with other elements of a spreadsheet. For example, you may require some formulas to be over-ridden with the scroll bar.

• In these cases, it is a good idea to attach a macro to the spinner box and be sure to also use range names to make the macro flexible.


Data Tables

Data tables can be effective in presentation of results when you want to test a number of scenarios.

Data tables are effective in financial models for break-even analysis, for sensitivity analysis and for credit analysis.

For example, you can see what happens to the year by year debt to capital ratio when the price is lower.


The General Concept of Data Tables -1

Before using data tables, you may have done the following when computing scenarios:

1. Run the model with a certain variable2. Copy and then paste special the an important

variable to another part of the spread sheet3. Run the model with another value for the

input variable4. Copy and paste special the output variable

with the second value of the input variable to section of the spreadsheet variable with the scenarios


The General Concept of Data Tables -2

The data tables do this for you. They work as if you keep re-running the excel model with different input variables and then copying and pasting special the output variables to another area of the sheet.

Therefore, to operate a data table, you need to know the output variable that you want to report and the input variable (or variables) that you want to adjust.


Before Running Data Tables – A Couple of things you should know

The data tables are very effective, but they can be frustrating if you are just beginning to use them. Further, Excel has quirks that make them a bit confusing.

1. First, when you run a data table, the input variable MUST BE ON THE SAME SHEET as the data table

2. In the TOOLS, and OPTIONS and CALCULATION menu, the calculation option should be set to AUTOMATIC, otherwise, you need to press the F9 key to re-calculate the data table.

After explaining the data table, these issues will be addressed. For now, make variable is on the same sheet as the data table and make sure that the calculations is set to automatic.


Setting the Calculation to Automatic

The setting to automatic is illustrated below. It is a much better idea to set the calculation to automatic except data tables as explained below, but for now set it to automatic as illustrated

Get the menu from the TOOLS, OPTIONS and CALCULATION Menu. Set to AUTOMATIC


One Way and Two Way Data Tables

Once you are sure the input variable is in the sheet where you will put the data table and the calculation is set to automatic, you must decide whether you need a one-way or a two-way data table. The difference is the following:

1. A one way data table has one INPUT Variable and as many output variables as you want

2. A two way data table has one OUTPUT Variable and two input variables


The Difference Between One-Way Data Tables and Two-Way Data Tables

• In developing data tables, it is important to understand the difference between one way and two way data tables.•One Way

•These are the most useful – here you can analyze multiple outputs given an single input variable.

•Two Way•Here you can analyze two different input variables on an output variable, but you can only analyze one output variable.

Input Variable

Output Variables

Output Variable


Step by Step Data Table ProcessWith the calculation set to automatic and the input variable in the same sheet, use the following three steps for a one way data table for break-even analysis:

1.Set-up the table using multiple output variables and a single input variable as explained on the next slide

2.Shade the entire data table (but NOT THE TITLES)

3.Go to the Excel Menu and Press DATA, TABLE4.A box will appear asking for a ROW and a Column

INPUT. Enter the SINGLE INPUT Variable in the Column input and LEAVE the ROW INPUT BLANK


Setting Up a One Way Data Table

Use the following process to set up a data table with ONE INPUT variable and One or MORE OUTPUT Variables

1. Input the range in input variables in a single column (you could also enter the variables in a row)

2. Move ONE Row Above the first input variable and one column to the Right of the first input variable and enter a formula that depends on the input variable (a formula can be a cell with an = linking to a formula in another sheet)

3. To enter more variables, move to the right and enter more formulas

Input variables can be in any increment and you can use formulas

Output Variables must be one up and one to the right of the top input variable


Entering the Row and Column Input

The most confusing part of entering a data table is putting in the values for the row input and column input. Note a couple of points:

1. Excel asks for one cell and not multiple cells – you must always enter one cell

2. If there is an output formula, there is no need for an input cell

In this example, there is no row input cell and the column input cell refers to the input.


Graph of Data Table with Sensitivity

In the example below, the series are graphed with different levels of junior debt to evaluate how break-even points are affected. Please see the sensitivity analysis section

Run with different sensitivity variables


Conditional Formatting with Data Tables to Illustrate Hurdle Values

To illustrate when values are less than or greater than hurdle rates, follow the following process:

1. Enter hurdle rates above variables in the table

2. Use conditional formatting with one column referring to the hurdle rate

3. Copy the format from the first column to other columns


Entering Hurdle Rates

An Example of entering hurdle rates is shown in the table below

Enter the hurdle rate above the data table


Use Conditional Formatting with One Variable

Conditional formatting can be used to show when the values are below the hurdle rate.

Use relative references when defining the conditional formatting and use the less than criteria


Results of Conditional Formatting with Data Table

The following illustrates the data table after the conditional formatting has been used


Finding the Break-Even Point with Match and Index

You can use the match and index command to find the point at which the hurdle rate is achieved once the table is computed. To do this follow the following steps:

1. Use the match statement to find the row number in the table that matches with the hurdle rate.

2. Use the index command with the data array as the input values and the row number from the match statement

The match and index statements are described below.


Using the Match Statement with Ascending Data

Often the data tables will have data that decreases with higher row numbers. In this case you should use the match statement with -1 at the end of the statement as follows:

MATCH(HURDLE,DATA COL,-1)

If the data is ascending, then use 1 instead of -1 in the match function. Once the row number is found, use it with the index command as follows

INDEX(DATA COL,MATCH ROW)


Two Way Data TablesWith two way data tables, you can enter two input variables instead of one variable.

Here you must set-up the table with sensitivity inputs on a row and sensitivity inputs on a column

The formula goes between the row and the column

Row of Table

Column of table


Set Up Table


Two Way Data Table with Rows and Columns


Row Table – Sensitivity Analysis

A one-way data table can work with rows instead of columns. In this example, a sensitivity factor is in cell B2. This will drive the data table.


Step 2 – Set up Scenarios

Note that in this case the data is input across a row rather than down a column. The other mechanics are similar.


Define Range and Table

In a one way data table defined with rows, use the row input cell instead of the column input cell.


Scenario Manager

For “What if” analysisValues produced by alternative drivers stored as scenariosOperation

Tools ScenariosAdd ScenarioScenario Summary ReportReport Manager

Use the Scenario case in the exercises

Buttons, Scroll Bars and Combo Boxes

These items can be good for presentation and are easy to implement. They are very good if you want to use alternative inputs in many different pages of a spreadsheet


Finding the Developer Toolbar in Excel 2007


Scroll Bars, Spinner Boxes and Combo Boxes

• Scroll bars, spinner boxes and combo boxes may seem like gimmicks, but they can improve the structure and the accuracy of spreadsheets by allowing you to change inputs from many places while keeping the inputs themselves in the input sheet.• To implement these boxes and bars, select the View,

Toolbars, Forms options from the main menu.• Once the menu of buttons appears, select the appropriate

button and click on it with the mouse. After you have selected the form, a + sign will appear and paint it somewhere in your worksheet with the mouse.

• To make the form operational, right click on the form and then use the format control option that appears.

Be careful – do not use the view, toolbars and control toolbox option


Excel Discussion of Scroll Box Scroll bar Scrolls through a range of values when you click the scroll arrows or when you drag a scroll box. You can move through a page of values by clicking between the scroll box and a scroll arrow. Scroll bar properties

Current value The relative position of the scroll box within the scroll bar.Minimum value The position of the scroll box closest to the top of a vertical scroll bar or the left end of a horizontal scroll bar.

Maximum value The position of the scroll box farthest from the top of a vertical scroll bar or the right end of a horizontal scroll bar.

Incremental change The amount the scroll box moves when the arrow at either end of the scroll bar is clicked.

Page change The amount the scroll box moves when you click between the scroll box and one of the scroll arrows.

Cell link Returns the current position of the scroll box. This number can be used in a formula or macro to respond to the position of the scroll box.

3D shading Displays the scroll bar with a 3-dimensional shaded effect.

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Spinner Box

Spinner Increases or decreases a value. To increase the value, click the up arrow; to decrease the value, click the down arrow.Spinner properties

Current value The relative position of the spinner within the range of allowed values.Minimum value The lowest value allowed for the spinner.Maximum value The highest value allowed for the spinner.Incremental change The amount the spinner increases or decreases when the arrows are clicked.Cell link Returns the current position of the spinner. This number can be used in a formula or macro to return the actual value you want selected by the spinner.3D shading Displays the spinner with a 3-dimensional shaded effect.

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Sensitivity Analysis

To illustrate how to use the forms, the following slides show a step by step process to add sensitivity analysis to a model. This analysis involves the following:

1. Graph data in the model2. Add a spinner box to an input variable in

the model3. Put a title in the graph that lists key

inputs and key outputs


Creating a Graph with F11 or ALT, F1

The simplest way to create a graph is simply to shade the data that you want graphed and then to press the F11 key.

A graph can also be created with the ALT and F1 key. I cannot find any difference between the F11 and the Alt F1 Key


Creating titles on a Graph with the F11 or the Alt F1 Key

To illustrate how to create titles with the F11 or the Alt F1 Key, consider the following table.

If the F11 key is pressed in any cell next to or above, below or in the corner of the table, the graph will be created with appropriate scale names and series names.


Illustration of Scroll Bar for Sensitivity Analysis – Put a Scroll to Change Graph

Step 1:Set up a sensitivity analysis with a graph and use the View, Toolbars, Forms from the main menu. This is useful when evaluating a single variable.

The sensitivity analysis will be driven by the number in the yellow cell. This will be changed with the scroll bar.

Results of View, Toolbars, Forms


Adding a Scroll Bar or Other Form to the Excel Sheet

To add a form, use the following three steps:

Retrieve scroll bar using view/toolbar/form.

Then click on a form AND LET GO. You will see a + sign on the excel sheet.

Finally, to put the form on the sheet, use the left mouse key and re-size the form

This is a blank form that must be linked to the yellow cell.


Edit Format Control of Scroll BoxStep 3:

Assign the scroll box to the sensitivity factor and assign a minimum and maximum value

To link the cell, right click on the scroll box form and assign the cell link to the yellow cell


Adjusting Scroll Bars and Spinner Boxes with Decimals or Large Numbers

A problem with the excel forms is that they do not accept percentages, large numbers or negative numbers. To implement the scroll bars in this case, use the following process:

1. Attach the spinner or the scroll to a blank cell in excel with ranges between zero and 100

2. Name the blank cell so that you can put it in another cell

3. Compute the actual input percent through dividing the cell link (with a range name) by 100.

100% 100Cell Link

Cell Link/100


Adding Cell References to Graph Titles

Step 1:

Put Something in Graph Title – any title at all; in this case the word “test.”

Without some text, the process will not work

Right click on the graph and select the chart options and then the chart titles


Type the Text and the Numbers to be in the Title in a Single Row

When attaching a title, the set of text and titles must be on one row in excel. You can put a second line on the graph using the ALT and ENTER key as part of the text. The example below illustrates the process.

Use the ALT and ENTER to put a second line on the graph


Click on the Existing Title and Link to the Row with the Text and Numbers

Click on the title and then put an = sign in the formula bar

Click on the temporary title

Put an = sign in the formula bar


Shade the row with the text and the title in order to finish the graph title

The final step is to shade the graph title and press the ENTER key. The final result is shown below.

Shade the row with the text and the titles


Adding Numbers to Strings of Text – For Titles and Graphing – Format as Decimal

Append Strings and Make Number a

decimal

An alternative way to add a title is to use the text command in excel and string the text together with the & sign


Adding Numbers to String – Format the Number with Commas and Decimals

Use Commas instead of decimal in example

below


Adding a New Line to a Graph Title

You often would like to control where a new line occurs. This can be controlled by using the CHAR(10) function as part of the text command. For example, the following would split the title that is presented on the graph:

“First Line”&char(10)&”Second Line”


Adding Text in a Graph

Sometimes you would like the text box of a graph to change when results of the spreadsheet change.

To do this, first add the text box. Then, once the text box is on the sheet, go to the formula bar and use an = sign to refer to the text that will go into the text box


Example of Adding a Text box

The sample below shows how to add a text box

Note the equal sign in the formula bar after text box has been created

Use the & key and the text function and the CHAR(10) to create a string for use in the text box

Data Tables

Data Tables are very effective in Developing Break-even and

Sensitivity Analysis in Models


Analysis with a Break-Even Table

Once you have a data table, you can do a lot of analysis with the data table including:

1. Illustrating the data variable together with sensitivity analysis on other variables

2. Graphing the data table3. Using the conditional formatting with the data table

to highlight when hurdle values are not met4. Computing break-even values using the match

and index command

This analysis is explained below with a one way data table


Putting Flexible Titles in Graphs

Adding flexible titles to graphs is an effective way make sensitivity presentations and to monitor results while you are developing a model. For example, you can show a graph of the cash flows and at the same time show the equity and project IRR. To do this use the following four step process:

•Create a blank title with some text – the process does not work without an existing title•Click on the graph title•Link the title with a cell or a row somewhere in the sheet•Adjust the format of the rows

instructions for operation of excel sensitivity and scenario analysis used in the course

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