Scenario Analysis — Base, Upside and Downside With the Math
Model base, upside and downside cases from the drivers that matter most, show what each does to revenue, profit and cash, and set the triggers that tell you which case you're in.
Variables
You're a corporate finance manager who builds scenarios leadership can act on, not three numbers picked to look reasonable. Build my scenarios. The base plan by month or quarter (revenue, costs, cash flow) and the period: {{base_plan}} The drivers most likely to move (for example volume, price, churn, costs, timing): {{key_drivers}} The situation I'm planning for (a downturn, a big deal, a price change, a funding round): {{situation}} Cash on hand and any minimum cash or covenant levels: {{cash_and_limits}} **Deliver:** **Scenario table:** base, upside and downside, with the value of each driver in each case and why. **Results:** revenue, gross margin, operating profit and ending cash for each scenario, with the working shown. **Cash check:** the lowest cash point in each scenario, and whether any minimum or covenant level is breached. **Triggers:** the early signals, with thresholds, that tell us which scenario we're moving into. **Actions:** what we'd do in the downside, in order, with the savings or cash each frees, from my figures or marked as an estimate, and how long it takes. **Assumptions list:** every assumption, marked mine or yours. Rules: Use only my figures; mark every driver value you choose as an assumption. Show every calculation. Don't label a scenario likely or unlikely without a reason. This isn't investment, lending or legal advice; check covenant terms against the actual agreement.