What-if Analysis / Goalseek
In Strategic Focus what-if analysis the activity driver sensitivities display in a flowchart format. Above is an example of what would be necessary to move from the current ROCE of 15.41% to the desired goal of 16%.
Goal-seeking demonstrates the changes required to achieve the desired financial ratio results. Given the current starting point and desired goal the software investigates the level of changes necessary to reach the desired value.
eg: Goalseek how the return on capital employed (ROCE) can be increased from 15.41% to 16%. Strategic Focus identifies promising strategies and shows them in order of effectiveness.
- In the above example the ROCE goal could be achieved by changes in any of the following strategic actions;
- Price increase
- Cost of sales amount
- volume of sales increase
- changes to
- non-current assets
- current assets
- current liabilities
- other income
- accounts payable days, accounts receivable days
- raw material days
- WIP days
- product days.
However some strategies require larger shifts than others. The strategic actions can either be implemented individually or combinations can be used.
A drop in cost of sales of 0.91% would achieve a ROCE of 16% as would a price increase of .56%.
If an individual change seems too radical you can enter a comfortable amount and get the software to determine the other possible compensatory actions.