Software that helps the user evaluate alternatives. It allows for the creation of a data model, which is a series of data elements in equation form; for example, gross profit = gross sales - cost of goods sold. Different values can be plugged into the elements, and the impact of various options can be assessed (what if?).
A financial planning system is a step above a spreadsheet by providing additional analysis tools; however, increasingly, these capabilities are being built into spreadsheets. For example, sensitivity analysis assigns a range of values to a data element, which causes that data to be highlighted if it ever exceeds that range.
Goal seeking provides automatic calculation. For example, by entering gross margin = 50% as well as the minimums and maximums of the various inputs, the program will calculate an optimum mix of inputs to achieve the goal (output).
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