According to Heys (2008), ‘base-case analysis’, ‘what-if analysis’, and ‘risk analysis’ are the three main categories of spreadsheet analysis. Though each of these is used in speculating outcomes using Microsoft Office Excel on a worksheet, each of them applies a different form of parameters and procedures. This paper explores how Base-case analysis, What-if analysis, and Risk analysis are important features of the Microsoft Office Excel analysis process.
For example, risk-analysis model can be used analyzing the expected value of a certain investment after the next 20 years given uncertain returns in each year. [/paycontent] In this regard, risk analysis tools including Crystal Ball is used to identify the probability of realizing certain investment return targets over a certain period of time. Using risk analysis in Excel Spreadsheet is mainly done using simulation method in order to analyze the effect of uncertain variables impact on the output (Porter & Stephenson, 2010). This is usually done by setting a certain standardized parameters which are basically used in predicting the outputs of various uncertain scenarios. By doing so, it becomes easier for the researcher to establish the most viable plans to pursue based on risk analysis outcomes done.
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Porter, J. & Stephenson, T. (2010). Creating an excel-based budget you’ll really use. Strategic Finance, 91(8), 26-33.