What-if modeling in most cases involves taking a copy of data you already have and then making alterations to that data for changes to:
Profit & Loss Statement
- Absolute or % increases/decreases to revenue, expenses
- Add/move/remove products, locations lines of business
- Change headcount SG&A allocations, standard costing, interest rates, tax rates, depreciation method
Balance Sheet
- Change days sales outstanding, inventory turnover, debt-to-equity assumption
- Increase/decrease capital
Consolidation
- Change currency conversion rates
- Re-organize business units
- Create an alternate roll-up
What-if modeling provides the organization with realistic alternatives and contingency planning. When there is a change to the economic climate, what-if modeling affords the organization greater flexibility to forecast its effect and act conclusively.
The CPM database allows you to dynamically link your statements together such that any line item changes are reflected throughout your entire financial model. CPM's versioning capabilities allow organizations to easily create copies of their existing plans, then CPM's rate templates, what-if modeling, allocation manager, and goal seeking features allow you to drive out your desired scenarios.
What-if Modeling can be top down where changes are made for an entire company, division or line of business or bottom up where changes are made to individual business units. CPM Reporting allows you to compare and contrast what-if scenarios against each other.
