Financial Sensitivity Analysis: ChangeBoard User Manual

Financial Sensitivity Analysis: ChangeBoard User Manual


The Financial Sensitivity Analysis is discussed in several places, under the heading ChangeBoard.
Go to the ChangeBoards Introduction for more information.

The data for the Sensitivity Analysis is added under the menu heading, Financial CB (for ChangeBoard).

12Faces have other types of ChangeBoards that appear in association with, for example, Sales data.

Enter the figure for a relevant period for Gross Profit and Operating Profit. When choosing a relevant period, take into account data that gives you a realistic result.

Consider the following examples:

  • If your data is highly seasonal, for example, tourist or Christmas, you may not want to use this data. Instead choose an average period.
  • You can choose a monthly period if you wish. But given that your months can be quite volatile, it may be better to settle on a quarter. It would certainly be safe to settle on an annual, but if you are a growing company, your annual figures will be behind the times. That is depending on the time of the year.
  • The “%” change that you enter can be any figure that you like. Ideally, it is a figure that you think is achievable in the next accounting period. If you are working in quarters, it might be by how much you can increase Revenue and/or Gross Profit and/or Operating Profit in the course of the quarter. Each of them get the same % change figure.

There is only one line of data required for your Financial ChangeBoard input. Additionally, you can look at this in the Financial CB report and overwrite those figures when you want to make changes. For example, for the next quarter.

Interpreting The Financial Sensitivity Graph on DashBoard

Test by adding the following data into the Financial CB Input:

  • Revenue = $500,000
  • Gross Profit = $250,000
  • Operating Profit = $50,000
  • % Change = 10%

Now go to the DashBoard tab and scroll to the ChangeBoard graph.

Firstly, hover over the Sales Increase column = 500,000:25,000

These figures refer to your starting Sales and the increase in Operating Profit you will gain with a 10% change in Sales.

The increase in Revenue is adjusted for your Gross Margin% to give the final Operating Profit change figure.

Secondly, hover over Price Increase and Overhead Decrease. These figures show you the effect that a 10% change with a Price increase and Overhead Costs decrease will have on your Operating Profit.

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