𝗦𝗰𝗲𝗻𝗮𝗿𝗶𝗼 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀

𝗦𝗰𝗲𝗻𝗮𝗿𝗶𝗼 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀

1️⃣ 𝗕𝗲𝘀𝘁 / 𝗪𝗼𝗿𝘀𝘁 𝗖𝗮𝘀𝗲 𝗦𝗰𝗲𝗻𝗮𝗿𝗶𝗼

Description: The best case scenario assumes the most favorable conditions for the business. Involves optimistic assumptions like sales growth, market conditions, etc. The worst case considers the worst possible conditions that could reasonably occur.

Purpose: Used for risk assessment and to ensure that the business can survive under adverse conditions.

2️⃣ 𝗦𝗲𝗻𝘀𝗶𝘁𝗶𝘃𝗶𝘁𝘆 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀

Description: This involves changing one key factor at a time (like sales volume, price, cost, etc.) to see how sensitive the model is to changes in that factor.

Purpose: Helps in understanding which variables have the most significant impact on the financial outcomes.

3️⃣ 𝗕𝗿𝗲𝗮𝗸-𝗘𝘃𝗲𝗻 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀

Description: This scenario determines the point at which total costs and total revenue are equal, i.e., there is no net loss or gain.

Purpose: Used to understand the minimum performance level required to avoid losses.

4️⃣ 𝗦𝘁𝗿𝗲𝘀𝘀 𝗧𝗲𝘀𝘁𝗶𝗻𝗴

Description: Involves applying extreme conditions or shocks to a single factor or a combination of factors in the model (e.g., sudden market crash, rapid interest rate changes).

Purpose: To test the resilience of the financial model under extreme but plausible conditions.

5️⃣ 𝗠𝗼𝗻𝘁𝗲 𝗖𝗮𝗿𝗹𝗼 𝗦𝗶𝗺𝘂𝗹𝗮𝘁𝗶𝗼𝗻

Description: A more complex form of scenario analysis that uses random sampling and statistical modeling to estimate possible outcomes.

Purpose: To account for risk and uncertainty in quantitative analysis and decision-making.

6️⃣ 𝗜𝗻𝗱𝘂𝘀𝘁𝗿𝘆-𝗦𝗽𝗲𝗰𝗶𝗳𝗶𝗰 𝗦𝗰𝗲𝗻𝗮𝗿𝗶𝗼𝘀

Description: Tailored to specific industries, these scenarios take into account factors unique to a particular sector (like regulatory changes in pharmaceuticals, technology shifts in IT, etc.).

Purpose: To provide more detailed and relevant insights for businesses operating in specific sectors.

7️⃣ 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗼𝗿𝘆 𝗜𝗺𝗽𝗮𝗰𝘁 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀

Description: Examines the impact of potential changes in laws or regulations on the financial model.

Purpose: To prepare for changes in the regulatory environment.