From the course: Excel Modeling Tips and Tricks
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Stress testing models - Microsoft Excel Tutorial
From the course: Excel Modeling Tips and Tricks
Stress testing models
- [Instructor] Reviewing financial models means not just being able to go through and understand what happened, but also being able to critically interpret those models and understand when there might be an issue, either an error or an aggressive assumption embedded into that model. Let's take a look at an example of how we can do this. I'm in the 0402 Begin Excel file. So we have here our forecast for RedTech 30 over the next few years. And what we might want to do is go through and say, okay, let me look at my key indicators, my key performance metrics for this particular firm, say revenue, net income, and units sold. And I just want to see kind of how aggressive that particular model is, right? How aggressive is our forecast? So to do this, I need to come up with some sort of an if statement that captures whether or not I think something is particularly aggressive. So in this case, we're going to use a 25% change between our forecast and last year's value, in this case in the…
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