Sensitivity analysis is a model to show how to target variables that are affected by changes in input variables. Sensitivity analysis determines how different values of independent variables affect a particular dependent variable under a given set of assumptions.
In this Case Study, I set a strategy were adopted from one January, what the cash balance closest to at the end of 2020, if:
– sales price increases by 12%
– forecast volume is lower going forward by 5%
– direct costs per unit are maintained.
In which quarter the cash shortfall peak, which month run out of the cash, what is the total of indirect cost forecast expected for the three years forecast, what is the closing accounts payable in December 2020, what is the forecast revenue in January 2019.
You as a financial analysis need to forecast the cash flow for the coming three years with a particular focus on the next twelve month, you will design a sensitivity financial model to determinate who the small change in the input assumption will effect in cash flow and revenue in the output, in which point of input assumption the cash flow is so sensitive, what strategy you need to set to a swift improvement in cash flow, to keep the businesses afloat.
This model template comes as a PREMIUM version in .xlsx file type which can be opened using MS Excel.