Deloitte 07 08 june 2012 - presentation material

© 2012 PT Deloitte Konsultan IndonesiaFinancial Modelling for Corporate Budgeting, Sensitivity & Scenario Analysis Using Excel & VBA
7 - 8 June 2012
Grand Hyatt, Jakarta
Financial Modelling
for Corporate Budgeting,
Sensitivity & Scenario Analysis
Using Excel & VBA
© 2012 PT Deloitte Konsultan IndonesiaFinancial Modelling for Corporate Budgeting, Sensitivity & Scenario Analysis Using Excel & VBA2
Sessions
Day 1 - 1
Day 1 - 2
Day 1 - 3
Day 1 - 4
Day 2 - 1
Day 2 - 2
Day 2 - 3
Day 2 - 4
Cash Flows, Financial Ratios
Income Statement, Cash Budget, Balance Sheet
Operating Expenses, Capital Budget
Assumptions, Sales, Collection, COGS, Inventory, Purchases
Model Overview, Design Principles, Model Flow Charts
Contribution Margin, Variance Analysis
Automatic Number Formatting, Dynamic Chart
Sensitivity & Scenario Analysis Dashboard

Financial
Modeling
Company
Knowledge
Accounting
Attention
to Details
Reading
Financial
Reports
E x c e l
& V B A
Corporate
Finance
Industry
Knowledg
e
Building a good financial model requires a “combination of various skills”.
Day 1 - Session 1

Financial Modeling
Day 1 Session 1a:
Overview of the Corporate Budget Model
Definition of Budget
Cambridge Dictionary
Budget : a plan to show how much money a person or
organization will earn and how much they will need or be able
to spend.
Fact in the Business World
• Business use several different types of budgets to manage their
operations.
• Whatever form various budgets may take, the primary goal of all
budgets is to provide a tangible and quantifiable estimate of the
receipt and allocation of resources.

Definition of Corporate Budget Model
Corporate Budget Model is a quantitative representation of a
company’s plan to achieve its short-term goals and objectives.
• Goals may be long term (5 to 10 years), but to meet long-term
goals, it is necessary to develop short-term strategies that are
incorporated into annual budgets.
• A budget should not be seen simply as means of limiting
expenditure or checking staff performance, but as a tool for
planning, coordinating and controlling the effective and efficient
use of resources so that the organization's daily operations are
directed towards its long-term goals.
What some experts said about spreadsheet models
John Sterman (professor of management at the MIT)
“as a result of the spreadsheet errors the average quality of
financial models has plummeted (crashed down) and many models
are not only useless but downright harmful to decision-makers”.
European Spreadsheet Risk Interest Group (EuSpRIG)
“in 2004 a large financial institution inaccurately presented its
financial report with US$ 1 billion discrepancy”.
Trans-Alta Corp
Trans-Alta Corp reported a loss of US$ 24 million due to
spreadsheet errors when executing a hedging contract.

Aim of the workshop
• Have a firm understanding of the steps involved in building
corporate budget models,
• Know how to use Excel to put that understanding to work in the
form of a working financial model,
• Know a proper methodology in planning, designing and
developing their own corporate budget models, faster, better and
with much fewer errors.
• Build a robust consolidated model
After attending this workshop, the participants are supposed to :
Focus of the Workshop
From a budgeting perspective, the workshop is focused on the :
“Master Budget”

Components of the Master Budget
Capital Budget Cash Budget
Budgeted
Balance Sheet
Budgeted Statement of Income
Cost-of-Goods Sold Budget
Sales and Collections Budget
Operating Expenses Budget
Inventory and Purchases Budget
Operating Budget
Financial Budget
Corporate Budget Model
[Display the excel format of corporate budget model]

Financial Modelling
Day 1 Session 1b:
Financial Modelling Design Principles
Assets This Year Last Year Cash Flows From
Cash 256,663$ 312,930$ Operating Activities
Sales Revenue 6,019,040$ Account Receivable 578,754$ 482,350$
Cost Of Goods Inventory 978,094$ 827,613$ Net Income 259,996$
Sold Expenses 3,912,376$ Prepaid Expenses 117,176$ 92,835$ Changes in Operating Cycle
Gross Margin 2,106,664$ Total Current Assets 1,930,687$ 1,715,728$ Assets and Liabilities
Operating Expenses 1,523,288$ Property, Plant & Equipment 1,986,450$ 1,597,050$ Accounts Receivable Increase (96,404)$
Operating Earnings Accumulated Depreciation (452,140)$ (339,348)$ Inventory Increase (150,481)$
Before Depreciation 583,376$ Total Assets 3,464,997$ 2,973,430$ Prepaid Expenses Increase (24,341)$
Depreciation Expense 112,792$ Accounts Payable Increase 58,318$
Operating Earnings 470,584$ Liabilities & Owners' Equity This Year Last Year Accrued Expenses Increase 40,283$
Interest Expense 76,650$ Accounts Payables: Income Tax Payable Increase 1,720$ (170,905)$
Earnings Before Inventory 300,952$ 268,300$ Operating Cash Flow Before Depreciation 89,091$
Income Tax 393,934$ Operating Expenses 87,882$ 62,216$ Depreciation Expense 112,792$
Income Tax Expense 133,938$ Total 388,834$ 330,516$ Cash Flows From Profit -Making Operation 201,883$
Net Income 259,996$
Accrued Expenses: Cash Flows From Investing Activities
Operations 175,764$ 137,900$ Purchases of Property, Plant & Equipment (389,400)$
Interest 12,775$ 10,356$
Total 188,539$ 148,256$ Cash Flows From Financing Activities
Net Incrase in Short-Term Debt 50,000$
Income Tax Payable 13,394$ 11,674$ Long Term Borrowings 75,000$
Short-Term Notes Payable 425,000$ 375,000$ Capital Stock Issue 100,000$
Total Current Liabilities 1,015,767$ 865,446$ Cash Dividends to Stockholders (93,750)$ 131,250$
Long-Term Notes Payable 550,000$ 475,000$ Increased (Decreased) in Cash During Year (56,267)$
Owners' Equity
Capital Stock 725,000$ 625,000$
Retained Earnings 1,174,230$ 1,007,984$
Total 1,899,230$ 1,632,984$
Total Liabilities
& Owners' Equity 3,464,997$ 2,973,430$
INCOME STATEMENT FOR YEAR
BALANCE SHEET AT END OF CASH FLOW STATEMENT FOR YEAR
Financial Statement Linkage
Financial Statement Interrelationship

Model Layout
• Benefit: create a highly flexible “engine” through which a set
of data can be passed.
• May seem simple, but requires discipline to apply.
• Consist of minimum of 3 sheets to separate numerical
inputs, workings and outputs for printing
Inputs
(numbers)
Workings
(formulas)
Outputs
(results)
Price
Volume
Cost
Loan
Interest rate
Revenue
COGS
Operating Cost
Interest Expense
Income Statement
Balance Sheet
Cash Flows
Ratios
Charts
The Model Development Process
1. Set up output & input templates
2. Populate input templates with base / test data
3. Create workings pages for all main sections &
develop calculations
4. Transfer results to output pages
5. Test or debug
6. Conduct user testing

1. Model ownership
2. Version control
3. Development log
4. Retaining old versions of the model
5. Regularly saving the model
6. Maintaining quality when under pressure
The Basics of Quality Control
1. Keep it simple
2. Have a clear idea of what the model needs to do
3. Be clear about what the users want and expect
4. Maintain a logical arrangement of the parts
5. Make all calculations in the model visible
6. Be consistent in everything you do
7. Think modular
8. Make full use of Excel’s power
9. Provide ways to prevent errors
10.Test, test, test
Design Principles for Good Model Development

Financial Modelling
Day 1 Session 1c:
Corporate Budget Model Flow Chart
Model Worksheets
INPUTS
Sheets
WORKINGS
Sheets
Sales & Collections
COGS
Inventory & Purchases
Headcount Cost
Operating Expenses
Capital
Depreciation
Cash
Historical Data
Assumptions
Balance Sheet
Income Statement
Cash Flows
Ratios
Contribution Margin
Variance Report
Sensitivity & Scenarios
Dynamic Chart
OUTPUTS
Sheets

Step 7: Capital
Budget
Step 8: Cash
Budget
Step 9: Budgeted
Balance Sheet
Step 6: Budgeted Statement of Income
Step 3: Cost-of-Goods Sold Budget
Step 2: Sales and Collections Budget
Step 5: Operating Expenses Budget
Step 4: Inventory and Purchases Budget
Operating Budget
Financial Budget
STEP 1: Assumptions
STEP 2: Sales and Collections Budget
2A: Unit Sales and Price Budget
2B: Sales Composition Budget
2C: Cash Collections from Customers Budget
2D: Accounts Receivable Budget

STEP 4: Inventory and Purchases Budget
4A: Inventory Budget
4B: Purchases Budget
4C: Disbursement for Purchases Budget
4D: Accounts Payable Budget
STEP 3: Cost-of-Goods-Sold Budget
STEP 5: Operating Expenses Budget
5A: Headcount Budget
5B: Operating Expenses Budget
5C: Disbursement for Operating Expenses
Budget

STEP 7: Capital Budget
STEP 8: Cash Budget
STEP 9: Budgeted
Balance Sheet
STEP 6: Budgeted Statement of Income
7A: Capital Expenditures Budget
7B: Disbursements of Capital Expenditures Budget
7C: Depreciation Budget
Sales and Collections Budget Related Sheets (Step 2)
INPUTS WORKINGS OUTPUTS
Assumptions
Sales and
Collections
Income Statement
Balance Sheet
Cash Flows
Cash (Budget)
Consolidated Statements

Cost-of-Goods-Sold Budget Related Sheets (Step 3)
Assumptions
Inventory and
Purchases
COGS Income Statement
Balance Sheet
Cash Flows
Cash (Budget)
Inventory & Purchases Budget Related Sheets (Step 4)
Assumptions
COGS
Inventory and
Purchases
Balance Sheet
Cash Flows
Cash (Budget)

Operating Expenses Budget Related Sheets (Step 5)
Assumptions
Operating
Expenses
Sales &
Collections Headcount
Capital
Income Statement
Cash (Budget)
29
Budgeted Statement of Income Related Sheets (Step 6)
Assumptions
Capital
Sales and
Collections
COGS
Operating
Expenses
Income Statement
Balance Sheet
Cash Flows
Cash (Budget)Headcount
30

Capital Budget Related Sheets (Step 7)
Assumptions
Operating
Expenses
Capital
Income Statement
Balance Sheet
Cash Flows
Cash (Budget)
31
Cash Budget Related Sheets (Step 8)
Assumptions
Income Statement
Balance Sheet
Cash Flows
Cash (Budget)Capital
Sales and
Collections
Inventory and
Purchases
Operating
Expenses
32

Budgeted Balance-Sheet Related Sheets (Step 9)
Assumptions
Income Statement
Balance Sheet
Cash Flows
Cash (Budget)
Capital
Sales and
Collections
Inventory and
Purchases
33
Statement of Cash Flows Related Sheets
(Cash Flows from Operating Activities)
Assumptions
Income Statement
Cash Flows
Capital
Sales and
Collections
Inventory and
Purchases
Changes in Balance
Sheet Accts
Balance Sheet
34

Statement of Cash Flows Related Sheets (continued)
(Cash Flows from Investing Activities)
Assumptions
Capital
Cash Flows
Balance Sheet
Income Statement
35
(Cash Flows from Financing Activities)
Cash Flows
Equity
Balance Sheet
Income Statement
Debt
Assumptions
36

Day 1 - Session 2
Financial Modelling
Day 1 Session 2:
Modelling Operating Budget:
Assumptions, Sales & Collection

Assumptions, Sales & Collection Budget
Budgeted
Balance Sheet
STEP 1: Assumptions
Operating Budget
Financial Budget
39
Assumptions
Why is separating Assumption worksheet so important?
• By centralizing all of the input variables into one single
location, users can easily test and evaluate the implications
of changes in the values of input variables across all
elements of a financial model.
• To avoid “hard coding” or entering specific input variables
directly into a worksheet.
Why is “hard coding” forbidden (“taboo”) in building a
financial model?
The resulting calculation or simulation will most probably
be wrong, because the hard codes are hidden
somewhere in many worksheets that we cannot control.
40

Assumptions
41
Other Assumptions
42

Budgeted
Balance Sheet
STEP 2 : Sales and Collections Budget
Operating Budget
Financial Budget
43
Sales and Collections Budget Related Sheets (Step 2)
Assumptions
and
Dashboard
Sales and
Collections
Income Statement
Balance Sheet
Cash Flows
Cash (Budget)
44

STEP 2: Sales and Collections Budget
2A: Unit Sales and Price Budget
2B: Sales Composition Budget
2C: Cash Collections from Customers Budget
2D: Accounts Receivable Budget
45
Step 2A: Unit Sales & Price
• The first step is to project total sales level on a per unit basis. Service-oriented
companies could use other metric such as “hours billed. Then define the
average “sales price” per unit.
Sales & Collection Budget
Step 2B: Sales Composition
• Calculate relative percentage of each types of sales in the financial model.
• A central component  many other elements are often based on it, such as:
inventory levels, operating expenses, purchase levels, ect.
Step 2C: Cash Collections from Customer
• Calculates and tracks sales on cash basis. Cash collections are calculated as
cash sales for a given time period + credit sales collected from the same
period + credit sales collected from the previous period
Step 2D: Accounts Receivable
• Keeps tracks of the outstanding credit sales. Defined as days receivable
metric, and calculated using the OFFSET function.
46

47
Financial Modelling
Day 1 Session 2:
Modelling Operating Budget:
COGS, Inventory & Purchases

Budgeted Balance
Sheet
Operating Budget
Financial Budget
MASTER BUDGET
49
Cost-of-Goods-Sold Budget Related Sheets (Step 3)
Assumptions
and
Dashboard
Inventory and
Purchases
COGS Income Statement
Balance Sheet
Cash Flows
Cash (Budget)
50

Overview of COGS Budget Module
51
STEP 4: Inventory and Purchases Budget
4A: Inventory Budget
4B: Purchases Budget
4C: Disbursement for Purchases Budget
4D: Accounts Payable Budget
52

Inventory & Purchases Budget Related Sheets (Step 4)
Assumptions
and
Dashboard
COGS
Inventory and
Purchases
Balance Sheet
Cash Flows
Cash (Budget)
53
Inventory & Purchases Budget Module
54

Day 1 - Session 3
Financial Modelling
Day 1 Session 3:
Modelling Operating Expenses
& Capital Budget

Operating Expenses & Capital Budget
Budgeted Balance
Sheet
Operating Budget
Financial Budget
MASTER BUDGET
57
STEP 5: Operating Expenses Budget
5A: Headcount Budget
5B: Operating Expenses Budget
5C: Disbursement for Operating Expenses Budget
58

Operating Expenses Budget Related Sheets (Step 5)
Assumptions
Operating
Expenses
Sales &
Collections Headcount
Capital
Income Statement
Cash (Budget)
59
Headcount Budget
60

Operating Expenses Budget Module
61
Capital
Budget
Cash Budget
Budgeted Balance
Sheet
Operating Budget
Financial Budget
MASTER BUDGET
62

STEP 7:
Capital Budget
STEP 8: Cash Budget
STEP 9: Budgeted
Balance Sheet
7B: Disbursement of Capital Expenditures Budget
63
Capital Budget Related Sheets (Step 7)
Assumptions
Operating
Expenses
Capital
Income Statement
Balance Sheet
Cash Flows
Cash (Budget)
64

Depreciation Sheet
65
Capital Budget Module
66

Day 1 - Session 4
Financial Modelling
Day 1 Session 4:
Modelling Cash Budget, Income Statement
& Balance Sheet

Cash, Income & Balance Sheet Budget
Balance Sheet
Budget
Income Budget
Operating Budget
Financial Budget
MASTER BUDGET
69
STEP 8:
Cash Budget
STEP 9: Balance
Sheet Budget
70

Cash Budget Related Sheets (Step 7)
Assumptions
Income Statement
Balance Sheet
Cash Flows
Cash
(Budget)
Capital
Sales and
Collections
Inventory and
Purchases
Operating
Expenses
71
Cash Budget Module
72

Budgeted
Balance Sheet
Operating Budget
Financial Budget
MASTER BUDGET
73
STEP 8: Cash Budget
STEP 9: Budgeted
Balance Sheet
74

Income Statement
75
Budgeted
Balance Sheet
Operating Budget
Financial Budget
MASTER BUDGET
76

STEP 8: Cash Budget
STEP 9: Budgeted
Balance Sheet
77
Budgeted Balance-Sheet Related Sheets (Step 7)
Assumptions
Income Statement
Balance Sheet
Cash Flows
Cash (Budget)
Capital
Sales and
Collections
Inventory and
Purchases
78

Balance Sheet
79
Day 2 - Session 1

Financial Modelling
Day 2 Session 1:
Modelling Cash Flow Statement &
Financial Ratios
Modelling Cash Flow Statement
Statement of Cash Flows Related Sheets
(Cash Flows from Operating Activities)
Assumptions
Income Statement
Cash Flows
Capital
Sales and
Collections
Inventory and
Purchases
Changes in Balance
Sheet Accts
Balance Sheet
82

(Cash Flows from Investing Activities)
Assumptions
Capital
Cash Flows
Balance Sheet
Income Statement
83
(Cash Flows from Financing Activities)
Assumptions
Cash Flows
Equity
Balance Sheet
Income Statement
Debt
84

Indirect Cash Flow
85
Direct Cash Flow
86

Day 2 - Session 2
Financial Modelling
Day 2 Session 2:
Modelling Contribution Margin &
Variance Analysis

© 2012 PT Deloitte Konsultan IndonesiaFinancial Modelling for Corporate Budgeting, Sensitivity & Scenario Analysis Using Excel & VBA89 89
Modelling Contribution Margin
Contribution Margin
Definition:
Contribution Margin is Sales Revenue minus Variable Cost
Unit Contribution Margin is Unit Sales Revenue minus Unit
Variable Cost
90

Operating Leverage
Definition:
Operating Leverage is Fixed Cost divided by Total Cost (Fixed
Cost + Variable Cost)
91
Breakeven Point in Units
Definition:
Breakeven Point in Units is Fixed Cost divided by Unit
Contribution Margin
92

Breakeven Point in Dollars
Definition:
Breakeven Point in Dollars is Breakeven Point in Units times
Price per Unit.
93
Variance Analysis
Sales - Budget:
=INDEX(FinancialStatements!$A$132:$M$151,
MATCH(VarianceReport!B6,FinancialStatements!$A$132:$A$151,0),
VarianceReport!$H$17+1)
Sales - Actual:
=INDEX(HistoricalFS!$A$66:$M$85,
MATCH(VarianceReport!B6,HistoricalFS!$A$66:$A$85,0),
VarianceReport!$H$17+1)

Variance Analysis
Budget figures are derived
from saved approved budget
in the FinancialStatements
sheet and actual figures are
derived from historical data
in the HistoricalFS sheet,
both using INDEX and
MATCH functions.
The budget and actual
figures above the chart
are derived from the
Variance Report table
using OFFSET
function.
Day 2 - Session 3

Financial Modelling
Day 2 Session 3:
Automatic Number Formatting &
Dynamic Chart
Automatic Number Formatting
98
When we have a list of number series using different formats,
e.g. round number, percentage, decimal, and we want to present
them one by one in different cells, we will want to see that when
we select, e.g. EBITDA, it should be in round number format,
ROE in percentage, Current Ratio in decimal, etc. How do we
automate the number formatting for the cells where those series
are displayed?
There are 2 ways to do it:
1) by using formula (a combination of IF, OR, TEXT and
OFFSET functions)
2) by using VBA / macro.
The 2nd way is easier.
In this training, we will learn to use both ways.

99
Automatic Number Formatting with Formula
=IF(OR($B$15=$B$4,$B$15=$B$5),TEXT(OFFSET(D3,$A$11,0),"0.00%"),
IF(OR($B$15=$B$6,$B$15=$B$7),TEXT(OFFSET(D3,$A$11,0),"#,###0"),
TEXT(OFFSET(D3,$A$11,0),"#0.##0")))
100
Automatic Number Formatting with VBA
Sub FormatChart()
Application.ScreenUpdating = False
If Range("B4") = "Return on Equity" _
Or Range("B4") = "Gross Profit Margin" _
Then Range("C4:N4").NumberFormat = "0.00%;[Red](0.00%)"
If Range("B4") = "Gross Profit" _
Or Range("B4") = "EBITDA" _
Then Range("C4:N4").NumberFormat = "#,###0;[Red](#,###0)"
If Range("B4") = " Current Ratio " _
Or Range("B4") = "Leverage" _
Then Range("C4:N4").NumberFormat = "#0.##0;[Red](#0.##0)"
End Sub

Dynamic Chart
101
Dynamic Chart
102
Have you ever asked yourself how many charts you should make
for 50 ratios each for a period of 10 years? 50? Or just 1? If you
know how to make a dynamic chart, then you should only make 1
chart that can dynamically represent 50 ratios. How?
In order to create a dynamic chart, we should use OFFSET
function and a combo-box. We should also use OFFSET function
to replace the static range used in the chart with a dynamic one
that can expand and retract.

Dynamic Chart
103
Syntax
OFFSET(reference, rows, cols, [height], [width])
The OFFSET function syntax has the following arguments:
• Reference (Required). The reference from which you want to base the offset.
Reference must refer to a cell or range of adjacent cells; otherwise, OFFSET
returns the #VALUE! error value.
• Rows (Required). The number of rows, up or down, that you want the upper-left
cell to refer to. Using 5 as the rows argument specifies that the upper-left cell in
the reference is five rows below reference. Rows can be positive (which means
below the starting reference) or negative (which means above the starting
reference).
• Cols (Required). The number of columns, to the left or right, that you want the
upper-left cell of the result to refer to. Using 5 as the cols argument specifies that
the upper-left cell in the reference is five columns to the right of reference. Cols
can be positive (which means to the right of the starting reference) or negative
(which means to the left of the starting reference).
• Height (Optional). The height, in number of rows, that you want the returned
reference to be. Height must be a positive number.
• Width (Optional). The width, in number of columns, that you want the returned
reference to be. Width must be a positive number.
Dynamic Chart
104
Above is the table of financial ratios for which we will make a
dynamic chart for presenting the ratios that we select from 2 list
boxes whose cell links are located in cell C77 and cell D77. These
2 cell links will be used in the formulas using OFFSET functions in a
table located in range B3:N5, which displays 2 ratios that we select
from the list boxes.

Dynamic Chart
105
Step 1 : Highlight the range B3:N5, select Insert, Column, and
2-D Column.
Dynamic Chart
106
Step 2 : Select the legend, and then select Layout, Legend,
and Show Legend at Bottom.

Dynamic Chart
107
Step 3 : Right click on the red Column chart and change it into
a Line chart.
Dynamic Chart
108
Now we have a Column chart and a Line chart.

Dynamic Chart
109
Step 4 : As we have 3 number formats to display, i.e. round
number, percentage, and decimal, we should make a
secondary axis. Right click on the Line chart, select
Format Data Series and Secondary Axis.
Dynamic Chart
110
Step 4a : With dual axes, now we can see 2 series with different
number formats.

Dynamic Chart
111
Step 5 : Now let’s make 3 dynamic ranges to replace the static
ranges used in the charts by using OFFSET functions.
Dynamic Chart
112
Step 5a : Using Name Manager, make dynamic ranges with
named formulas as follows:
chart_one:
=OFFSET(Chart!$C$4,0,Chart!$A$26-1,1,Chart!$A$28-Chart!$A$26+1)
chart_two:
timeline:
These dynamic ranges will replace static ranges used in the charts:
- chart_two will replace range C4:N4
- chart_two will replace range C5:N5
- timeline will replace range C3:N3

Dynamic Chart
113
Step 6 : Right click on the Column chart and select Select
Data. From the dialog box that appears, select the
series representing the Column chart, and click the
Edit button.
Dynamic Chart
114
Step 7 : Erase the static range $C$4:$N$4, press F3, select
chart_one, and click OK to replace it. Repeat Step 6
and 7 on the Line chart.

Dynamic Chart
115
Step 8 : Repeat Step 6 and 7 on the axis label (month) and
replace the static range $C$3:$N$3 with timeline.
Dynamic Chart
116
Step 9 : Now the chart is dynamic – it can represent all the
ratios available in the table located in the range
B50:N76. Simply select the ratios and period, and the
chart will update itself.

Dynamic Chart
117
Step 10 : Now we need to add a chart title, a dynamic one, that
represent the ratios and period that we select. Click on
the chart, select Layout, Chart Title, Above Chart, and
we will see a chart title above the chart.
Make the following formula somewhere below the ratio
table:
=B4&" & "&B5&" for the period of "&TEXT(B26,"mmm-
yy")&" through "&TEXT(B28,"mmm-yy")
which will display, e.g. “Current Ratio & Debt to Equity
Ratio for the period of Mar-2011 through Oct-2011”.
Now click on the chart title, type “=“, and put the cursor
on the cell where we the formula for the title. Now the
dynamic chart has a dynamic chart title! As we change
the ratios and period, the chart title will update itself.
Dynamic Chart
118

Day 2 - Session 4
Financial Modelling
Day 2 Session 4:

Sensitivity Analysis:
Analysis of the impact of change of “one variable” on one of its
outputs.
121
Scenario Analysis:
Analysis of the impact of change of “a set of variables” on one or
more of its outputs.
Sensitivity & Scenario Analysis Dashboard:
Dashboard for performing sensitivity & scenario analysis.
2-Way SSA Dashboard : 2 variables (inputs) & 1 output
122

1-Way SSA Dashboard : 1 variable (input) & more than 1 output
123
124

125
In order for a data table to function, its input cells must be on the same
sheet. As the inputs / assumptions and dashboard are located on
different sheets, those assumptions that will be used for scenarios
(presumably those of which changes generates the largest impacts on
their outputs) must be cut and pasted below the dashboard. As a result,
all formulas that contain their cell references will refer to the sheet where
the dashboard is located.
As we will not type in these assumptions for scenarios in the dashboard
sheet, we need to have a separate sheet in which we have the same list
of assumptions and link those input cells in the dashboard sheet to their
corresponding cells in this new separate sheet. We will have the
assumptions filled in this new assumption sheet.
For scenario analysis, we need to make 3 copies of the list of
assumptions for scenarios and pasted them below it. Name these 3 lists
as Base Case, Best Case and Worst Case. Use macros to automate the
copy and paste of each of these 3 lists to the original location of the list.
Inputs for 1-way and 2-Way SSA Dashboards
126

127
The Dashboard to be Developed in this Training
This dashboard is based on one-way data table where only one
variable is used to generate 5 outputs. As using more than one
data table to perform sensitivity analyses for more than one
variable will slow down the calculation speed of the financial
model, it is better to use a VBA-driven data table where various
variables can be used.
128
The Dashboard to be Developed in this Training (continued)
To build the dashboard, we need 7 combo-boxes, 2 macro
buttons, 1 spin button, 3 option buttons, one-way data table,
INDEX function, MATCH function, VLOOKUP function, MAX
function, and some VBA modules to automate the data table.

129
The Dashboard to be Developed in this Training (continued)
To perform a sensitivity analysis, select the variable, ratios (outputs)
and month, and see the results on the grey range. To change the
variables values in the yellow range, use the spin button by clicking
it up or down. Once we change the values of the variables, the
values of the ratios will automatically change. To perform a scenario
analysis, simply select one of the option buttons that represent 3
scenarios.
130
Spin button: It is used for
varying the values of the
variables.
Macro button: It is used for
assigning VBA modules
(macros) that we use for auto-
zoom-to-fit-screen and auto-
clearing of the data table.
Option button: It is used for
selecting a scenario.

131
Combo-Box: It is used in the dashboard for selecting the variable
and its corresponding outputs. To fill in the combo-box with the
list of variables or outputs, select and right click on it to display the
format control dialog box. Fill in the input range and cell link
boxes and click OK. The input range represents the list of
variables or outputs.
132
Step 1 : Fill in the combo-box as follows.

133
Step 1a : Assign the following macro to the combo-box.
134

135
136

137
138

139
140

141
142

143
144

145
146
Step 8 : Fill in Cell F3 with the following formula.

147
Step 9 : Fill in Cell F10 with the following formula.
148
Step 10 : Fill in Cell D5 with the following formula.

149
Step 11 : : Fill in Cell D6 with the following formula.
150

151
152

153
Step 15 : Fill in Cell K4 with the following formula.
154
Step 16 : Fill in Cell L4 with the following formula.

155
Step 17 : Fill in Cell J4 with the following formula.
156
Step 18 : Fill in Cell E5 with the following formula.

157
158

159
160

161
Step 23 : Right click on the spin button, select Format Control,
and set the maximum value at 10.
162
Step 24 : Right click on the macro button, select Assign Macro
and select ZoomToFitScreen2.

163
Step 25 : Right click on the macro button, select Assign Macro
and select ClearDataTable2.
164
Step 26 : Right click on the option button for Base Case, select
Assign Macro and select BaseCase. Do the same step
for the other 2 option buttons (Best Case and Worst
Case).

165
Now our dashboard is ready to be used for performing a
sensitivity and scenario analysis.
Sensitivity:
• Select the variable
• Select the outputs (Ratio 1 thru 5)
• Select the date
• And see the results!
Scenario:
• Select any one of the 3 scenarios and see the results.
Any questions?
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please
see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
Member of Deloitte Touche Tohmatsu Limited

Deloitte 07 08 june 2012 - presentation material

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