One classic use of a spreadsheet is to build a model of the flow of cash in a business, tracking revenues based on sales, or income from investments, and the fixed and variable expenses as they occur over time. Often the objective is to identify a breakeven analysis, that is comparing anticipated revenues to fix invariable costs, identifying in advance shortfalls that might require financing or a change of plans to reduce both types of costs. To explore a cash flow model we will look at a potential new business venture and use the model to make some critical decisions about that venture. So now let's turn back to the spreadsheet. After the work to layout your data and assumptions into a model format, now you can have some fun. By changing the values identified as decision variables or as assumptions about business environment, you can explore multiple possible scenarios for what the future might hold. For example, we can use our model to think about a large investment in marketing and sales, and the prospect that such an investment could change substantially our expected growth rate in unit sales. For example, we can use our model to think about a larger investment in marketing and sales and the prospect that such an investment would change substantially our expected growth rate and unit sales. So for instance, if we increase our advertising budget by 50% to 300 a month, we might be able to anticipate an increase in our annual sales growth to a larger number like, lets say, 50%. Should that happen, our end period cash budget looks much better as does our margin. It can be empowering to ask the what if questions and think about many possible alternative futures. What if we took in an investor and spent a lot more money on product development or on hiring? What if our growth in the adoption of customers was exponential and not linear? How could we scale our operations to accommodate exponential demand? What if the economic environment dramatically slows down? What could we do to endure? The assumptions in our models can be saved as scenarios. For example, let's assume in one case that investments in marketing result in an increase in unit sales. Let's create that scenario, as we've done here, with a 50% annual sales growth anticipated because of the larger advertising budget. By collecting those values together, I can save them as a scenario. By choosing data, what if analysis, scenario manager, adding a new scenario, in this case describing it as high growth. And clicking OK to save it. Similarly in a second case, let's consider the case of an economic turndown in which we still need to invest heavily in sales, but our sales remain flat. In that case, we'll leave our increase in the advertising budget, but we'll take back our sales growth rate to a flat 20% which is what we experienced historically last year. Those values can similarly be saved as a second scenario using data, what if analysis scenario manager, adding a second scenario called low growth. And now in the future after these scenarios have been created, it's easy to recall them at a later time choosing high growth or low growth. These are very simple scenarios with a small set of assumptions that are easy to recall. But as you build larger and more complex models, you might find the scenario tool useful to recall the set of variables associated with last year's performance or with a change in the business environment you've dealt with before.