Course Content
Mastering Discounted Cash Flow Analysis with Excel
Mastering Discounted Cash Flow Analysis with Excel
Modeling the Income Statement Items
In financial modeling, revenue forecasts are rarely linear. Markets change, strategies pivot, and assumptions evolve. That's why robust models don't just rely on one scenarioβthey build in flexibility to compare multiple what-if outcomes. This chapter introduces one of the most useful tools in that process: scenario toggles.
By integrating toggles into your modelβusually controlled by a simple input cellβyou allow the entire forecast to shift based on which scenario is selected. A "1" might activate the base case. A "2" could trigger an aggressive growth assumption. A "3" might simulate a conservative forecast with slower growth or pricing pressure.
The revenue model then pulls values based on that toggle. You can do this using IF
statements or more scalable functions like CHOOSE()
or INDEX()
depending on your preferred Excel approach.
This structure provides:
Clarity: you can label and define all your assumptions clearly under each scenario;
Efficiency: no need to rebuild the model from scratch for each situation;
Decision support: helps stakeholders understand best/worst case implications quickly.
Scenario-based modeling is especially valuable when:
Pitching to investors who want to understand upside and downside risks;
Performing sensitivity analysis around key drivers like unit sales, pricing, or market share;
Planning strategic decisions like expansion or product launches.
Ultimately, this method brings your model closer to real decision-making. It doesn't just compute a single numberβit tells a story across possible futures.
If you'd like to revisit formulas like IF
and CHOOSE
, check out Excel Formulas course.
Thanks for your feedback!