One of the powerful simulation tools, tornado analysis, captures the static impacts of each variable on the outcome of the model; that is, the tool automatically perturbs each variable in the model a preset amount, captures the fluctuation on the model s forecast or final result, and lists the resulting perturbations ranked from the most sig-nificant to the least. Figures 4-19 through 4-24 illustrate the application of a tornado analysis. For instance, Figure 4-19 is a sample discounted cash flow model where the input assumptions in the model are shown. The question is what are the critical success drivers that affect the model s output the most? That is, what really drives the net present value of $96.63, or which input variable impacts this value the most?

Figure 4-19: Sample discounted cash flow model.

The tornado chart tool can be obtained through Risk Simulator Tools Tornado Analysis. To follow along the first example, open the Tornado and Sensitivity Charts (Linear) file in the examples folder ( Risk Simulator Examples). Figure 4-20 shows this sample model where cell G6 containing the net present value is chosen as the target result to be analyzed. The target cell s precedents in the model are used in creating the tornado chart. Precedents are all the input variables that affect the outcome of the model. For instance, if the model consists of A = B + C, and where