Setting Economic Profit Options

You use the Sensitivity Analysis—Economic Profit tab to analyze sensitivity using a subset of value driver variables from the Full Model. Because this is a subset, calculations are faster and Strategic Finance aligns the sensitivity analysis with the Full Model.

  To set the shareholder value options:

  1. Access Sensitivity Analysis.

    See Accessing Sensitivity Analysis .

  2. Select Economic Profit.

  3. In Sensitivity of, select a variable on which to perform sensitivity analysis:

    • Cumulative Present Value of Economic Profit

    • Present Value of Residual Perpetuity

    • Economic Profit Corporate Value

    • Economic Profit Shareholder Value (default)

    • Economic Profit Shareholder Value per Share

  4. In As, select an option for displaying results:

    • Actual Value

      Displays Actual calculated values in the current file's scale.

    • Change In

      Displays the change from the current value.

    • Percent Change

      Displays the percentage change from the current value.

  5. In Relative to (top), select the top variable of the matrix on which the sensitivity is performed in addition to the increment type and amount.

    The list includes these value drivers:

    • Sales Growth Rate

      Note:

      The default is Sales Growth Rate unless you run Sensitivity Analysis with another value.

    • Profit Margin

    • Net Fixed Asset Turnover

    • Working Capital Turnover

    • Economic Profit RROC

    • Long-Term RROC

    • Tax Rate

    • Residual Value Tax Rate

  6. In Change % , enter the percent multiplied by or added to the Relative to account.

    You cannot enter negative amounts.

    Default: 1%

  7. In And relative to (left), select the left variable of the matrix on which the sensitivity is performed.

    The variables listed are the same as the Relative (top) field.

    Default: Profit Margin

  8. In Change %, enter the percent increment for the left variable.

    The Change % rules for the top variable field apply.

  9. In Change by, select a method to changing the sensitivity variable is changed:

    • Adding—Add the percentage to the variable.

    • Multiplying by—multiply the variable by the percentage. Default.

  10. Click OK.