What if analysis finance

This service is more advanced with JavaScript available. Encyclopedia of Database Systems Edition. Contents Search. What-If Analysis. Authors Authors and affiliations Stefano Rizzi. How to cite. Definition In order to be able to evaluate beforehand the impact of a strategic or tactical move so as to plan optimal strategies to reach their goals, decision makers need reliable predictive systems.

This is a preview of subscription content, log in to check access. Armstrong S. Forecasting for marketing. In Quantitative methods in marketing. Hooley and M. Hussey eds. Thompson Business Press, London, , pp. Google Scholar.

Balmin A. In the past, experts with a sophisticated understanding of the formulas and algorithms of business spreadsheet tools had to be hired to conduct simple what-if analysis. However, even experienced accountants and finance experts will struggle to make changes as minimal — yet influential — as 10 percent sales increases in particular divisions, or a 3 percent decline in another.

Planning and budgeting software, on the other hand, have made it much easier to carry out simultaneous simulations running countless scenarios against an array of changing variables. These technologies rely on cloud storage of huge stocks of data to perform predictions in no time. This diminishes the need for bookkeeping and forecasting expertise while maximizing the resulting accuracy and scope of garnered information.

Effective business forecasting begins with expertise, organization, and peak-accuracy software. To implement your forecasting and what-if analysis, your financial advisor will have to conduct the following:. Our team of consultants will help you plan your next fiscal years by anticipating future performance, pulling information from all relevant functions.

In highly competitive environments, few companies can afford to rely on narrow, unreliable what-if scenarios. Using purpose-built software , we align resources with technology to provide modern, fast-paced financial planning.

Lucrative and effective decision-making remains the end-goal of all financial analysis. Therefore, eCapital Advisors have established a structure and format of financial reporting which facilitates the analysis of provided data.

This improves the reliability of resulting strategies, and our team of consultants ensures your company is equipped with all relevant information to make the best-informed decisions. With all business strategies, case studies need to be considered to establish the reliability of findings.

The case study also found that a company may be able to cut its weekly reporting time in half by integrating our financial planning systems. This considerable improvement has provided companies like Allen Edmonds more time to focus on the finer factors of their business performance. Accurate business forecasting requires both insight and expertise. Robust business planning services do not end there; at eCapital Advisors, our experts are trained to provide you with accessible and precise financial reporting.

With our help, we believe that you can make the most fruitful decisions for your business, at a fraction of the labor time and cost of old forecasting methods. Entrust eCapital Advisors with your business today, and experience a rapid change into 21st-century fiscal efficiency. Could the unexpected expenses have been forecasted and accounted for with a different financial planning strategy? Does your cashflow match its forecasted levels?

Understanding Rolling Forecasts Rolling forecasts are rapidly replacing traditional, static budgeting methods. The technique is often deployed in conjunction with scenario planning, which is the process of analyzing potential scenarios and how they might impact future outcomes. As the name implies, what-if analysis is used in financial modeling to assess possible outcomes due to certain events that might be favorable or unfavorable to a business.

This is most commonly performed in conjunction with various scenarios. Scenarios are first created based on possible business impacts. For example, a steep decline in demand, a supply chain disruption, or the outcome of a pending litigation matter. At its core, what-if analysis is used to create and compare different financial plans and develop alternatives that can be used when a given condition changes. Whatever the various scenarios might be, what-if analysis attempts to quantify the impact of the various scenarios.

Among the various benefits of performing what-if analysis, there are some very practical applications. First, the outcomes help to develop different budgets based on changes in revenue as a result of some external force. Second, it allows business leaders to make decisions with better information at their disposal.