Excel Spreadsheets

One of the best uses of breakeven analysis is to play with various scenarios. For instance, if you add another person to the payroll, how many extra sales dollars will be needed to recover the extra salary expense? If you borrow, how much will be needed to cover the increased principal and interest payments? Many owners, especially retailers, like to calculate a daily breakdown. This spreadsheet is created to simplify the process, but not just a simple process. You can expand this spreadsheet to suit your needs.

In this model spreadsheet, forward term structure of interest rates is modeled. Then, using the model predicted forward yield curves, balance sheet of a hypothetical bank is simulated by employing the duration measure. This balance sheet simulation shows the possible variations in the shareholders’ wealth (assets minus liabilities, sometimes called “economic value”) caused by the mismatch (gap) on the balance sheet.

Nearly everyone who has ever started a business has underestimated the costs, and then faced the danger of running with inadequate capital reserves. The key to avoiding this pitfall is to adopt a rigorous approach to your research and planning. This spreadsheet is created to lead you through the process.