From the course: Excel for Business Analysts

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Price, volume, and sensitivity analysis

Price, volume, and sensitivity analysis - Microsoft Excel Tutorial

From the course: Excel for Business Analysts

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Price, volume, and sensitivity analysis

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- [Instructor] One of the most useful tools for business analysts is what's called the sensitivity analysis. The sensitivity analysis lets us go through and examine what might happen to a particular variable given changes into other variables. For instance, what might happen to our profitability given changes in our price and sales volume? What might happen to our profitability given changes in our cost structure and our productivity? A variety of different scenarios can be constructed by the business analyst. So let's take a look at a simple example. I'm in the 04_07_Begin Excel file. Now I've put together some simple data here. We've got a company selling widgets. They sell 1,000 widgets at a price of $100 per widget, and their unit cost is $80. That means when we think about their profit and loss, their cost of goods sold is 80 grand. $80 times 1,000 widgets, which means their gross profit then is simply $100 per…

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