Scenario Analysis
The scenario analysis examines future probable events by considering their feasible outcomes. This process is very useful in estimating fluctuations in business valuation. Scenario analysis remains essential in favorable and unfavorable events. This process improves many aspects of financial modeling.
- List out the assumptions to create scenarios
- Determine the number of desired scenarios
- Gathering required details for all the identified scenarios
- Ensuring identical layouts for all the scenarios
- Place details of the scenario in the Financial Model
- Note down all the outcomes from different scenarios
- Advice to management based on the derived outcomes