Revenue Growth Sensitivity Analysis

Sensitivity analysis looks into understanding the relationship between input and target variables while scenario analysis requires describing a specific scenario in detail.

Revenue growth sensitivity analysis. Available to download instantly all the model requires of the user is for the input of data in order to auto populate the output data. Find how sensitive the net. Forecasting the cash flow. A sensitivity analysis otherwise known as a what if analysis or a data table is another in a long line of powerful excel tools that allows a user to see what the desired result of the financial model would be under different circumstances.

Testing involves examining the incremental effect of various changes in assumptions cost of capital terminal growth rates lower revenue growth higher capital requirements etc on the fair value of the stock. According to the overall sensitivity analysis a change of 1 percentage point in nominal gdp has. What if calculations enable the forecaster to check the variance in end results for a. Use the following values for these inputs as the corresponding assumptions.

Calculations for testing a financial model using different assumptions and scenarios. Our beginning point is year one revenue for the revenue growth. Type the second list in the. In the example we have input a range of revenue growth assumptions.

Let s see how these values would. It s an input not links. Sensitivity analysis in general the nominal gdp forecast is a good indicator of growth in own source revenue excluding revenue from government enterprises given the direct link between tax bases and nominal gdp. We evaluate sensitivity for another input say cash flows growth rate while keeping the rest of inputs constant.

For example if the revenue growth assumption in a model is 10 year. Sensitivity analysis in excel. Description this is a ready to use excel model which will allow the user to create a sensitivity analysis for a company s revenue streams. In our data table 14 3 is the revenue growth and 35 4 is the cost of revenue of sales.

Once a base case is established dcf analysis should always be tested under various sensitivity scenarios. Sensitivity analysis is used to understand the effect of a set of independent variables on some dependent variable under certain specific conditions. Also sensitivity analysis looks at the effect of isolated changes in inputs while scenario analysis looks at situations of significant changes. For example a financial analyst wants to find out the effect of a company s net working capital on its profit margin.

Daily operating expenses as 3 of total revenue and initial cost of 2 billion.