What if rules in excel

IF function – nested formulas and avoiding pitfalls

The IF function allows you to make a logical comparison between a value and what you expect by testing for a condition and returning a result if True or False.

=IF(Something is True, then do something, otherwise do something else)

So an IF statement can have two results. The first result is if your comparison is True, the second if your comparison is False.

IF statements are incredibly robust, and form the basis of many spreadsheet models, but they are also the root cause of many spreadsheet issues. Ideally, an IF statement should apply to minimal conditions, such as Male/Female, Yes/No/Maybe, to name a few, but sometimes you might need to evaluate more complex scenarios that require nesting* more than 3 IF functions together.

* “Nesting” refers to the practice of joining multiple functions together in one formula.

Use the IF function, one of the logical functions, to return one value if a condition is true and another value if it’s false.

IF(logical_test, value_if_true, [value_if_false])

The condition you want to test.

The value that you want returned if the result of logical_test is TRUE.

The value that you want returned if the result of logical_test is FALSE.

While Excel will allow you to nest up to 64 different IF functions, it’s not at all advisable to do so. Why?

Multiple IF statements require a great deal of thought to build correctly and make sure that their logic can calculate correctly through each condition all the way to the end. If you don’t nest your formula 100% accurately, then it might work 75% of the time, but return unexpected results 25% of the time. Unfortunately, the odds of you catching the 25% are slim.

Multiple IF statements can become incredibly difficult to maintain, especially when you come back some time later and try to figure out what you, or worse someone else, was trying to do.

If you find yourself with an IF statement that just seems to keep growing with no end in sight, it’s time to put down the mouse and rethink your strategy.

Let’s look at how to properly create a complex nested IF statement using multiple IFs, and when to recognize that it’s time to use another tool in your Excel arsenal.

Examples

Following is an example of a relatively standard nested IF statement to convert student test scores to their letter grade equivalent.

97,»A+»,IF(B2>93,»A»,IF(B2>89,»A-«,IF(B2>87,»B+»,IF(B2>83,»B»,IF(B2>79,»B-«,IF(B2>77,»C+»,IF(B2>73,»C»,IF(B2>69,»C-«,IF(B2>57,»D+»,IF(B2>53,»D»,IF(B2>49,»D-«,»F»))))))))))))» loading=»lazy»>

This complex nested IF statement follows a straightforward logic:

If the Test Score (in cell D2) is greater than 89, then the student gets an A

If the Test Score is greater than 79, then the student gets a B

If the Test Score is greater than 69, then the student gets a C

If the Test Score is greater than 59, then the student gets a D

Otherwise the student gets an F

This particular example is relatively safe because it’s not likely that the correlation between test scores and letter grades will change, so it won’t require much maintenance. But here’s a thought – what if you need to segment the grades between A+, A and A- (and so on)? Now your four condition IF statement needs to be rewritten to have 12 conditions! Here’s what your formula would look like now:

It’s still functionally accurate and will work as expected, but it takes a long time to write and longer to test to make sure it does what you want. Another glaring issue is that you’ve had to enter the scores and equivalent letter grades by hand. What are the odds that you’ll accidentally have a typo? Now imagine trying to do this 64 times with more complex conditions! Sure, it’s possible, but do you really want to subject yourself to this kind of effort and probable errors that will be really hard to spot?

Tip: Every function in Excel requires an opening and closing parenthesis (). Excel will try to help you figure out what goes where by coloring different parts of your formula when you’re editing it. For instance, if you were to edit the above formula, as you move the cursor past each of the ending parentheses “)”, its corresponding opening parenthesis will turn the same color. This can be especially useful in complex nested formulas when you’re trying to figure out if you have enough matching parentheses.

Additional examples

Following is a very common example of calculating Sales Commission based on levels of Revenue achievement.

15000,20%,IF(C9>12500,17.5%,IF(C9>10000,15%,IF(C9>7500,12.5%,IF(C9>5000,10%,0)))))» loading=»lazy»>

This formula says IF(C9 is Greater Than 15,000 then return 20%, IF(C9 is Greater Than 12,500 then return 17.5%, and so on.

While it’s remarkably similar to the earlier Grades example, this formula is a great example of how difficult it can be to maintain large IF statements – what would you need to do if your organization decided to add new compensation levels and possibly even change the existing dollar or percentage values? You’d have a lot of work on your hands!

Tip: You can insert line breaks in the formula bar to make long formulas easier to read. Just press ALT+ENTER before the text you want to wrap to a new line.

Here is an example of the commission scenario with the logic out of order:

5000,10%,IF(C9>7500,12.5%,IF(C9>10000,15%,IF(C9>12500,17.5%,IF(C9>15000,20%,0)))))» loading=»lazy»>

Can you see what’s wrong? Compare the order of the Revenue comparisons to the previous example. Which way is this one going? That’s right, it’s going from bottom up ($5,000 to $15,000), not the other way around. But why should that be such a big deal? It’s a big deal because the formula can’t pass the first evaluation for any value over $5,000. Let’s say you’ve got $12,500 in revenue – the IF statement will return 10% because it is greater than $5,000, and it will stop there. This can be incredibly problematic because in a lot of situations these types of errors go unnoticed until they’ve had a negative impact. So knowing that there are some serious pitfalls with complex nested IF statements, what can you do? In most cases, you can use the VLOOKUP function instead of building a complex formula with the IF function. Using VLOOKUP, you first need to create a reference table:

This formula says to look for the value in C2 in the range C5:C17. If the value is found, then return the corresponding value from the same row in column D.

Similarly, this formula looks for the value in cell B9 in the range B2:B22. If the value is found, then return the corresponding value from the same row in column C.

Note: Both of these VLOOKUPs use the TRUE argument at the end of the formulas, meaning we want them to look for an approxiate match. In other words, it will match the exact values in the lookup table, as well as any values that fall between them. In this case the lookup tables need to be sorted in Ascending order, from smallest to largest.

VLOOKUP is covered in much more detail here, but this is sure a lot simpler than a 12-level, complex nested IF statement! There are other less obvious benefits as well:

VLOOKUP reference tables are right out in the open and easy to see.

Table values can be easily updated and you never have to touch the formula if your conditions change.

If you don’t want people to see or interfere with your reference table, just put it on another worksheet.

Did you know?

There is now an IFS function that can replace multiple, nested IF statements with a single function. So instead of our initial grades example, which has 4 nested IF functions:

It can be made much simpler with a single IFS function:

The IFS function is great because you don’t need to worry about all of those IF statements and parentheses.

Note: This feature is only available if you have a Microsoft 365 subscription. If you are a Microsoft 365subscriber, make sure you have the latest version of Office.

Need more help?

You can always ask an expert in the Excel Tech Community or get support in the Answers community.

Источник

A Beginner’s Guide to What If Analysis in Excel

Join the Excel conversation on Slack

Ask a question or join the conversation for all things Excel on our Slack channel.

If you’ve ever experimented with different variables to see how your changes would affect the outcome of a situation, you’ve done a what if analysis.

Would you be able to sell more items if you had a sale this week? Or would you make more money by increasing the price instead? In the above scenarios, you want to know the degree to which each change affects the overall outcome. For this reason, a what if analysis is also known as a sensitivity analysis.

Most what if analyses are really mathematical calculations, and that is Excel’s specialty. To help you do a what if analysis, Excel uses commands from the Forecast command group on the Data tab to prepare simple forecasts or advanced business models.

Download your free Excel practice file

Use this free Excel file to practice what if analysis along with the tutorial.

Goal Seek

The simplest sensitivity analysis tool in Excel is Goal Seek. Assuming that you know the single outcome you would like to achieve, the Goal Seek feature in Excel allows you to arrive at that goal by mathematically adjusting a single variable within the equation.

To illustrate how it works, imagine that the bank is offering an interest rate of 9% per annum on personal loans with 24 months to repay, and that you would like to borrow $40,000.

Using the above information, the bank calculates that the amount borrowed plus interest over the loan period will be $47,200, as shown in cell B5. The amount to be paid each month is also calculated and shown in cell B6.

By using the Goal Seek command, we can indicate a desired outcome and Excel will determine the adjustment we need to make to a single variable.

In the example above, cell B5 is dependent on the variables in cells B1, B2, and B3. Cell B6 is dependent on cells B3 and B5. Therefore, if we determine that the monthly repayment amount quoted is higher than desired, we can use Goal Seek to set the monthly amount to $1750. Excel can work backwards to change either cell B1, B2, or B3 to reach that goal.

Practically speaking, we may not have much control over the interest rate, so it is more likely that we have the option of adjusting the amount we borrow, or the repayment period.

Our first inclination may be to find out how much we will be able to borrow if we pay $1750 per month and all other variables remain the same. Excel will change the principal (B1) based on the number we enter as the new value for cell B6.

Assuming that the interest amount (9%) and loan period (24 months) remain the same, the new principal amount is calculated and displayed in cell B1 if a valid solution exists.

1. The cell chosen in the “Set cell” field must be a cell containing a formula.
2. The cell chosen in the “By changing cell” field must be a cell containing a constant.
3. Once “OK” is selected from the Goal Seek Status window, the values on the worksheet are adjusted and are only retrievable by selecting the ‘Undo’ command (Ctrl+Z Windows shortcut/Cmd+Z Mac shortcut).

Scenario Manager

Another what if analysis tool is the Scenario Manager. This option is somewhat more advanced than Goal Seek in that it allows the adjustment of multiple variables at the same time.

Some other noticeable differences between Goal Seek and Scenario Manager are listed below:

• The Scenario Manager allows the creation of an unlimited number of possible scenarios by changing up to 32 variables at a time.
• Each scenario can be saved for comparative purposes.
• Scenarios may be named and edited, and a brief description provided.
• Only constant values should be changed within the Scenario Manager — cells with formulas should not be manually adjusted.

If we continue our bank loan example, we can determine our model’s sensitivity to change by adjusting any or all of the values in cell B1, B2, or B3.

Best practice

As a best practice, the original worksheet data should be saved as a scenario so that you can revert to it after all the experiments have been completed.

Step 1 — Click ‘What If Analysis’ from the Data tab and select Scenario Manager.

Step 2 — Click ‘Add’ from the Scenario Manager pop-up window.

Step 3 — Name this scenario “Original” and enter the cell references of all cells with constant values that you may consider changing in other scenarios (maximum 32 cells). Click OK.

Step 4 — For the “Original” scenario, do not adjust any values in the ‘Scenario Values’ window.

Step 5 — Click ‘Add’ to create your first experimental scenario.

Creating experimental scenarios

When creating an experimental scenario, give the scenario a descriptive name from the ‘Add Scenario’ pop-up window. The changing cells will be the same as the ones referenced in your ‘Original’ scenario.

Even if you will not be adjusting all the values in those cells, it is highly recommended that they remain referenced in the ‘changing cells’ field. You may place additional details about the experimental scenario in the ‘Comment’ field (see below).

As illustrated above, our experimental scenario is given the name “36 months” and refers to cells B1 to B3 as changing cells. An additional comment indicates that this scenario is to determine the effect of borrowing $40,000 over a 36-month period.

In the ‘Scenario Values’ window, each changing cell is displayed as a field where we can manipulate the constant value so as to affect the outcome of the dependent cells — in our case, cells B5 and B6. As described in our scenario name and comments, we only adjust cell B3 by changing the value to 36.

To add another scenario at this point, select ‘Add’. If not, click OK.

Adjust multiple variables

To experiment with adjusting multiple variables within one scenario, the steps are the same as above, with the exception that the desired changes would be made in the Scenario Values window.

For example, to get Excel to perform a what if analysis on borrowing $50,000 over a 36-month period in the above situation at the same rate of interest, we would simply adjust the fields referencing those variables after creating a new scenario. Excel’s Scenario Manager can handle an unlimited number of scenarios created in this same way.

A list of created scenarios can be viewed by clicking OK from the Scenario Values window, or by selecting Scenario Manager from the What If Analysis dropdown menu.

To see the outcome of each adjustment on the output cell(s), either double click on a scenario name, or highlight a name and click Show.

Scenario summary

Scenarios that have been created may also be compared side by side with the creation of a Scenario summary worksheet, which is generated by selecting ‘Summary’ from the Scenario Manager window.

There are two report types available — Scenario summary and Scenario PivotTable report. Result cells are the cells that will be displayed in the summary. Ideally, these should include all cells which were adjusted as well as result cells. It’s also a good idea to select cells that contain header names so that these are clearly displayed in the summary.

Choosing the ‘Scenario summary’ option will create a new sheet within the workbook that displays each scenario in columnar format. Changing Cells are highlighted in gray, and Result Cells are displayed under Changing Cells.

Note that if named ranges were created for Changing or Result Cells, range names will be displayed instead of cell references.

Selecting the Scenario PivotTable report type will create a pivot table report in a new worksheet. Learn more about pivot tables from our Resource Library.

Using data tables for what if analysis

The third what if analysis tool from the Forecast command group is the Data Table. Data tables allow the adjustment of only one or two variables within a dataset, but each variable can have an unlimited number of possible values. Data tables are designed for side-by-side comparisons in a way that makes them easier to read than scenarios, once they are set up correctly.

Data tables are under-utilized, but are not as scary as they may seem.

One-variable data tables

If the only variable to be considered in our loan example were the amount being borrowed, we could set up a one-variable data table.

Step 1 — make a list of all possible principal loan amounts. The list may be by column or row. In our example, we will enter a column list in the range D9 to D12.

Step 2 — In an adjacent column, enter the formula which was used to arrive at the original outcome. In this case, we can simply type =B6 in cell E8. This links our new data table to the original variables.

Step 3 — Select the entire data table range, including the list of variable values, the formula, and blank cells.

Step 4 — From the What If Analysis dropdown menu, select Data Table.

Step 5 — In the column input cell field (since we entered our variables in column format), enter the cell reference that was used to calculate the result in the original dataset. In the above example, this would be cell B1 since this is the variable we have adjusted. No value is entered in the ‘Row input cell’ field in this instance since this is a one-variable data table.

Step 6 — Select OK. The result is a list of outcomes created by adjusting the one variable in cell B1, assuming that all other variables remain constant.

To create a row-oriented data table, the variables would be listed horizontally, and the row input cell would be used in the Data Table window instead of the column input cell.

Two-variable data tables

When creating a two-variable data table, one set of values is listed horizontally and the other set is listed vertically. In our example, we will add the loan period (term) as our second variable, displayed horizontally.

In this case, the formula which was used to arrive at the original outcome must be replicated above the vertical list of variables. As shown below, we type =B6 in cell D7. This links our new data table to the original variables.

As before, highlight the entire data table range and select Data Table from the What If Analysis menu. The row input cell is the cell reference (B3) that corresponds to the horizontal variables from the original dataset, while the column input cell (B1) corresponds to the vertical variables.

When we select OK, Excel returns a matrix that can be used to compare the outcome of different changes to our original scenario. It may be necessary to adjust the output cells to the appropriate number format for your data type (in the case of the above example, currency).

Summary

Now that you’ve taken the time to demystify how to do a what if analysis in Excel by using these three main tools, why not experiment with using them in different settings — like budget management, profit margin percentages, project completion targets, and the like?

Once you get the hang of these, you’ll want to check out our resource center and take our Basic and Advanced Excel course to become a real pro!

Ready to become a certified Excel ninja?

Start learning for free with GoSkills courses

Источник

What-If Analysis in Excel is a tool that helps us create different models, scenarios, and Data Tables. This article will look at the ways of using What-If Analysis.

We have three parts of What-If Analysis in Excel. They are as follows:

1. Scenario Manager
2. Goal Seek in Excel
3. Data Table in Excel

You can download this What-If Analysis Excel Template here – What-If Analysis Excel Template

#1 Scenario Manager in What-If Analysis

As a business head, it is important to know the different scenarios of your future project. Based on the scenarios, the business head will make decisions. For example, you are going to undertake one of the important projects. You have done your homework and listed all the possible expenditures from your end, and below is the list of all your expenses.

The expected cash flow from this project is $75 million, which is in cell C2. Total expenses comprise all your fixed and variable expenses, the total cost is $57.45 million in cell C12. Total profit is $17.55 million in cell C14, and profit % is 23.40% of your cash inflow.

It is the basic scenario of your project. Now, you need to know the profit scenario if some of your expenses increase or decrease.

Scenario 1

• In a general case scenario, you have estimated the “Project License” cost to be $10 million, but you are sure anticipating it to be $15 million
• Raw material costs to be increased by $2.5 million
• Other expensesOther expenses comprise all the non-operating costs incurred for the supporting business operations. Such payments like rent, insurance and taxes have no direct connection with the mainstream business activities.read more to be decreased by 50 thousand.

Scenario 2

• The “Project Cost” to be at $20 million
• The “Labor Daily Wages” to be at $5 million
• The “Operating Cost” is to be at $3.5 million

Now, you have listed out all the scenarios in the form. Based on these scenarios, you need to create a table about how it will impact your profit and profit %.

Total Excel has created three scenarios even though we have supplied only two scenario changes because Excel will show existing reports as one scenario.

From this table, we can easily see the impact of changes in pour profit %.

#2 Goal Seek in What-If Analysis

Now, we know the Scenario Manager’s advantage. What-if-Analysis Goal Seek can tell you what you must do to achieve the target.

Andrew is a class 10th student. His target is to achieve an average score of 85 in the final exam. He has already completed 5 exams and left with only 1 exam. Therefore, in the completed 5 exams.

To calculate the current average, apply the average formula in the B7 cell.

The current average is 82.2.

Andrew’s GOAL is 85. His current average is 82.2. He is short by 3.8 with one exam.

Now, the question is how much he has to score in the final exam to eventually get an overall average of 85. It can be found by the What-If Analysis GOAL SEEK tool.

• Step 1: Go to DATA > What-If Analysis > Goal Seek.

• Step 2: It will show you below the dialog box.

• Step 3: Here, we need to set the cell first. “Set cell” is nothing but which cell we need for the final result, i.e., our overall average cell (B7). Next is “To value.” Again, Andrew’s overall average GOAL is nothing but for what value we need to set the cell (85).

The next and final step is changing which cell you want to see the impact on. So, we need to change cell B6, the cell for the final subject’s score.

• Step 4: Click on “OK.” Excel will take a few seconds to complete the process, but it eventually shows the result like the one below.

Now, we have our results here. To get an overall average of 85, Andrew has to score 99 in the final exam.

#3 Data Table in What-If Analysis

We have already seen two wonderful techniques under What-If Analysis in Excel. First, the Data Table can create different scenario tables based on the variable change. We have two kinds of Data Tables here: one variable Data Table and a “Two-variable data tableA two-variable data table helps analyze how two different variables impact the overall data table. In simple terms, it helps determine what effect does changing the two variables have on the result.read more.” This article will show you One variable data table in ExcelOne variable data table in excel means changing one variable with multiple options and getting the results for multiple scenarios. The data inputs in one variable data table are either in a single column or across a row.read more.

Assume you are selling 1,000 products at ₹15, your total anticipated expense is ₹12,500, and your profit is ₹2,500.

You are not happy with the profit you are getting. Your anticipated profit is ₹7,500. You have decided to increase your per-unit price to increase your profit, but you do not know how much you need to increase.

Data tables can help you. Create a table below.

Now, in the cell, F1 links to the “Total Profit” cell, B6.

• Step 1: Select the newly created table.

• Step 2: Go to DATA > What-if Analysis > Data Table.

• Step 3: Now, you will see below dialog box.

• Step 4: Since we are showing the result vertically, leave the ”Row input cell.” In the “Column input cell,” select cell B2, which is the original selling price.

• Step 5: Click on “OK” to get the results. It will list out profit numbers in the new table.

So, we have our Data Table ready. To profit from ₹7,500, you need to sell at ₹20 per unit.

Things to Remember

• The What-If Analysis data table can be performed with two variable changes. Refer to our article on What-If Analysis two-variable Data Table.
• What-If Analysis Goal Seek takes a few seconds to perform calculations.
• What-If Analysis Scenario Manager can give a summary with input numbers and current values together.

Recommended Articles

This article is a guide to What-If Analysis in Excel. Here, we discuss three types of What-If Analysis in Excel such as 1) Scenario Manager, 2) Goal Seek, 3) Data Tables along with practical examples, and a downloadable Excel template. You may learn more about Excel from the following articles: –

• Pareto Analysis in ExcelA pareto chart is a graph which is a combination of a bar graph and a line graph, indicates the defect frequency and its cumulative impact. It helps in finding the defects to observe the best possible and overall improvement measure.read more
• Goal Seek in VBA
• Sensitivity Analysis in Excel