6 Ways to Use What If Analysis in Excel and Examples
Have you ever had to make a critical decision without knowing its impact on business outcomes?
In the workplace, you must make decisions quickly and accurately. Without proper simulation, the risk of making mistakes increases.
As a solution, you can use Excel’s what-if analysis feature to test various possibilities before making a final decision.
What Is Excel’s What-If Analysis?
Excel’s What-If Analysis is a feature used to simulate various possibilities based on specific data changes.
This feature helps you see how the output changes based on your input. You can use this feature for the planning and decision-making stages of data analysis.
Excel’s What-If Analysis Function for Data Analysis
Before using this feature, let’s understand the main benefits of Excel’s What-If Analysis feature in data analysis.
1. Testing Various Data Scenarios
You can try various inputs to see how the results of each decision change without changing the original data.
2. Assisting Decision-Making
With data simulation, you can determine the best choice based on optimal data, not just assumptions.
3. Predicting Future Results
What-If analysis is generally used to project sales, costs, or profits so you can plan your business strategy more thoroughly.
Types of What-If Analysis in Excel
Excel provides several types of what-if analysis features that can be used according to your analysis needs, namely Goal Seek, Data Table, and Scenario Manager.
1. Goal Seek
Goal Seek is used to find the input values needed to achieve a specific target. You simply specify the desired outcome, and Excel will calculate the input values. This feature can be used to analyze sales or profit targets.
2. Data Table
Data Table allows you to view the results of various input combinations simultaneously. This feature helps compare multiple scenarios in a single table and facilitates the analysis of data change patterns.
3. Scenario Manager
Finally, there’s Scenario Manager, which is used to store and compare several different scenarios, such as optimistic, normal, and pessimistic scenarios. Use this feature to analyze business risks.
Advantages of What If Analysis in Excel
There are several reasons why this feature is widely used, including:
1. Helps with Faster Decision-Making
You can immediately see the results of various scenarios without manual calculations, speeding up the analysis process.
2. Can Simulate Without Changing the Original Data
The original data remains safe because the simulation is run separately. With this feature, you can experiment without the risk of data corruption.
3. Suitable for Financial and Operational Analysis
This feature is highly relevant for business calculations—such as profit, costs, and targets—and can be used for various analytical needs.
Examples of Using Excel What-If Analysis in Business
Here are some examples of its use in the workplace to enhance your understanding.
1. Determining Sales Targets
You can use Goal Seek to determine the sales volume required to meet a specific target.
2. Price and Profit Simulation
You can test different prices to see their impact on profits, helping you determine the best price.
3. Installment or Financial Analysis
The what-if analysis feature can be used to calculate installments based on interest or tenor, simplifying financial planning.
How to Use What-If Analysis in Excel
Let’s look at a simple example dataset below.
Item Price per Unit Quantity Sold Total Sales
Product A 50,000 100
Product B 75,000 80
Product C 60,000 120
Here’s a complete guide on how to systematically use Excel’s what-if analysis to calculate total sales:
1. Prepare the Data and Formulas
Enter the formula =B2*C2 in the Total Sales column because Goal Seek can only work if the final result comes from a formula.
2. Click the Data Tab to Find the What If Analysis Menu
Click cell D2, then click the Data tab, then What If Analysis. Select the Goal Seek feature, and Excel will display a settings box for defining the target you want to achieve.
3. Fill in the “Set Cell” section
Select the cell containing the total sales formula, for example, D2.
4. Fill in “To Value”
In the To Value section, enter the target you want to achieve, for example, 1,000,000. This means you want total sales of Product A to be Rp10,000,000.
5. Fill in “By Changing Cell”
Select the cell with the number of items sold, for example, C2.
6. Click OK, and Excel will automatically estimate the number of items needed to reach the target.
Excel will automatically calculate the number of sales needed to reach Rp10,000,000 and then display the result in the relevant cell.
It’s Time to Use Excel More Strategically for Business
That explains how to use the “what-if” analysis feature in Excel to make more accurate, faster, and data-driven decisions. With this feature, you don’t just see numbers but also understand the possibilities behind them.
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