Using direct and indirect methods
There are two methods in sensitivity analysis, direct and indirect methods. Both methods make use of data tables that can be found under What If? in the forecast group on the Data ribbon in Excel.
In order to make use of the data table, you must structure your data in a particular way. The cell at the top-left corner of the table layout must be related to the target value share price, whose behavior we wish to observe.
Figure 11.16 – Layout for a data table
That specific position is essential for the data table function to work. However, since it will not be used for anything else, it is shown here in a white font, making it invisible, so as not to cause any distraction. The row input values are entered across the top row of the table. We have selected the terminal growth rate for the row input, with values from 3% with 1% increments up to 7%.
The column input is revenue growth (Compound Annual Growth Rate (CAGR...
