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Tornado Chart Example

This document provides an example of how to build a ranked sensitivity or tornado chart. It contains instructions on setting up sensitivity data in a table, ranking the factors by their impact on the key output, and generating a tornado chart to visualize the ranked factors. The example uses a simple profit and loss model to demonstrate calculating the effect of adjusting assumptions and building the ranked sensitivity chart. It is intended to help users understand how to construct a tornado chart to analyze sensitivity of factors in a financial model.

Uploaded by

Chinh Lê Đình
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© © All Rights Reserved
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
242 views

Tornado Chart Example

This document provides an example of how to build a ranked sensitivity or tornado chart. It contains instructions on setting up sensitivity data in a table, ranking the factors by their impact on the key output, and generating a tornado chart to visualize the ranked factors. The example uses a simple profit and loss model to demonstrate calculating the effect of adjusting assumptions and building the ranked sensitivity chart. It is intended to help users understand how to construct a tornado chart to analyze sensitivity of factors in a financial model.

Uploaded by

Chinh Lê Đình
Copyright
© © All Rights Reserved
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
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Corality Pty Ltd

PLEASE
PLEASE READ:
READ:

Tornado Chart Example

If,
If, upon
upon opening,
opening, this
this file
file appears
appears to
to contain
contain errors
errors
(e.g.
(e.g. #NAME?),
#NAME?), please
please ensure
ensure the
the following:
following:

Go to Table of Contents

Go
Go to
to Tools
Tools ->
-> Add-Ins
Add-Ins (ALT
(ALT +
+T
T+
+ I,
I, all
all versions
versions of
of
Excel);
Excel);
Make
Make sure
sure Analysis
Analysis ToolPak
ToolPak and
and Analysis
Analysis ToolPak
ToolPak
-- VBA
VBA add-ins
add-ins are
are both
both checked.
checked.

Primary Developer: Liam Bastick


General Cover Notes:
How to build a ranked sensitivity chart (often known as a tornado chart).
Any queries, please e-mail:
Website:
For past articles visit:

[email protected]
www.corality.com
www.sumproduct.com

Table of Contents
Tornado Chart Example
Go to Cover Sheet

Section & Sheet Titles


1. Tornado Chart Example
a. Tornado Chart
b. Simple P&L Example

Total Pages:

Page
3
4
5

Tornado Chart Example


Section 1.
Tornado Chart Example
Go to Table of Contents

Section Cover Notes:


Walk-through example.

Tornado Chart
Tornado Chart Example
Go to Table of Contents


Tornado Chart
Sensitivity Data
Units Produced

Proportion of Product A

Price of Product A

Price of Product B

Gross Margin, Product A

Gross Margin, Product B

Operating Expenditure

Tax

Data Table
Raw Data
"Adj
"Adj Spread"
Spread" acknowledges
acknowledges that
that the
the RANK
RANK function
function
will
will allow
allow more
more than
than one
one value
value to
to have
have the
the same
same
rank,
rank, which
which will
will cause
cause problems
problems in
in calculations
calculations
below.
below.

Activate? 1

Units Produced
Proportion of Product A
Price of Product A
Price of Product B
Gross Margin, Product A
Gross Margin, Product B
Operating Expenditure
Tax

(10.0%)
$317,909
$438,397
$348,031
$424,222
$348,031
$424,222
$545,344
$473,816

$454,344
$454,344
$454,344
$454,344
$454,344
$454,344
$454,344
$454,344

10.0%
$590,778
$470,291
$560,656
$484,466
$560,656
$484,466
$363,344
$434,872

(10.0%)
($136,434)
($15,947)
($106,313)
($30,122)
($106,313)
($30,122)
$91,000
$19,472

10.0%
$136,434
$15,947
$106,313
$30,122
$106,313
$30,122
($91,000)
($19,472)

(10.0%)
($136,434)
($106,313)
($106,313)
$91,000
($30,122)
($30,122)
$19,472
($15,947)

10.0%
$136,434
$106,313
$106,313
($91,000)
$30,122
$30,122
($19,472)
$15,947

This
This adjustment
adjustment (second
(second half
half of
of the
the calculation)
calculation) is
is
merely
merely an
an adjustment
adjustment that
that takes
takes into
into account
account
original
position
in
the
sensitivity
table
(e.g.
if
two
original position in the sensitivity table (e.g. if two or
or
more
more items
items are
are tied,
tied, they
they are
are ranked
ranked as
as to
to which
which was
was
higher
higher in
in the
the original
original table).
table).
This
This is
is one
one type
type of
of adjustment:
adjustment: feel
feel free
free to
to revise
revise
accordingly.
accordingly.

Cleaned Data
1
2
3
4
5
6
7
8

Units Produced
Proportion of Product A
Price of Product A
Price of Product B
Gross Margin, Product A
Gross Margin, Product B
Operating Expenditure
Tax

Spread
Adj Spread
$272,869
$272,869
$31,894
$31,894
$212,625
$212,625
$60,244
$60,244
$212,625
$212,625
$60,244
$60,244
$182,000
$182,000
$38,944
$38,944

Rank

Ranked data
1
2
3
4
5
6
7
8

Units Produced
Price of Product A
Gross Margin, Product A
Operating Expenditure
Price of Product B
Gross Margin, Product B
Tax
Proportion of Product A

Tornado Chart

Tornado Chart
Units Produced

Sensitivity

Price of Product A
Gross Margin, Product A
Operating Expenditure
Price of Product B
Gross Margin, Product B
Tax
Proportion of Product A
($200,000)

($100,000)

NPAT ($k)

$100,000

$200,000

1
8
2
5
3
6
4
7

Tornado Chart
Tornado Chart Example
Go to Table of Contents

Simple P&L Example


Tornado Chart Example
Go to Table of Contents

Simple P&L Example


Assumptions
Units Produced
Proportion of Product A
Proportion of Product B
Price of Product A
Price of Product B
Gross Margin, Product A
Gross Margin, Product B
Operating Expenditure
Tax

Input
45,000
75.0%

Sensitivity
-

Used
45,000
75.0%
25.0%
$100.00
$75.00
45.0%
51.0%
$1,300,000
30.0%

$100.00
$75.00
45.0%
51.0%
$1,300,000
30.0%

Product A
33,750
$100.00
$3,375,000

Product B
11,250
$75.00
$843,750

$93.75
$4,218,750

($1,856,250)

($413,438)

($2,269,688)

$1,518,750

$430,313

$1,949,063

Outputs
Revenue
Units
Price
Revenue
Cost Of Goods Sold
Gross Margin
Operating Expenditure
Net Profit Before Tax
Tax Expense
Net Profit After Tax

Total
45,000

($1,300,000)
$649,063
($194,719)
$454,344

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