Modeling credit scenarios. We have been given a company case and it is our job as credit analysts now to build some flexibility in so that we can run some different scenarios. We're going to build two additional scenarios to the company case. We're gonna build a conservative or bank case and then we're gonna build a downside case. The first thing we wanna do is identify the drivers that we'd like to sensitize. So in this model we have a good bit of detail, not a tremendous amount of detail, but we have some. We have revenues broken down by US and international, and then we've got our costs broken down by manufacturing costs and SG&A costs, et cetera. So I think what we'd like to do here is we'd like to sensitize our revenues so that we can slow EBITDA growth. And then we'd like to sensitize cost of sales so that we can contract EBITDA as a percentage of sales. Now, the way the model is set up, it's a tower model and we've got our income statement or balance sheet and our cash flow all below. I've already got the company case wired into my income statement in terms of the growth, and I've already got the cost of sales wired in as well. So rather than rewire the entire model, I'm going to keep these two rows as the driver rows. I just need to add some rows around it so that we can layer the additional scenarios on top. So the first thing that I'll do here is I will create some room and then I'm going to have US sales be kind of the header for this section. And then we'll have a company case and I'll indent that. Then we'll have the bank case, and then we'll have the downside case.

And then the chosen case or the active case is still going to be my row nine.

I need to put some assumptions in here. So the first thing I'm gonna do is just copy these formats above.

And then I'll copy them down as well. And it's going to be our job now to actually figure out what we want to do for a bank case and a downside case. Because this is a fabricated case, there really is no right answer, except to say that for the bank case, we would wanna look at sort of the historicals and what we know about the company through our own conversations and our research. Maybe it's looking at equity research or talking to our in-house equity research analyst and just try and come up with something that is a little bit more conservative or perhaps shades toward the performance that they have delivered in the past as opposed to the performance that they hope to deliver. So I'm just gonna, for assumptions, put in 6%, 5%, 4% and then keep that constant across. And then now for the downside case, we have to do some testing with this because overall, we want the downside case to be about 20 to 30% less than the company case. But we're really just looking at what could go wrong here. And what could go wrong here is that they could deliver sales growth like they did a couple of years ago of 3%. So we'll just keep it at 3% throughout the entire forecast. The next thing we need to do is build a selector switch and that will enable us to toggle back and forth. So in this cell here, we're simply going to, again, we'll copy the formats from this cell so that we can identify to the user of the model that it is an input cell. And then we need to put a dropdown box in here so we can choose between the company case, the bank case and the downside case. That's done by doing Alt + A + V for data validation, V again for data validation. And then we wanna do allow: list. And the list source is going to be these three here: company case, bank case and downside case. So if I hit enter and then I go into that sell and hit Alt + arrow down, I get company case, bank case and downside case. Now what I can do is I have to go into my US sales growth and I need to change this format because this is actually no longer an assumption cell. This is going to be the result cell of what we have chosen through our toggle. I think what I'll do here is I'll just copy in the format from the previous cell, which will be Alt + H + V + S for special, Alt + H + V + S for special. And I just want the format, T. So now it should show up with white background and black font. What I need to do now is put a formula in here that says based on whatever's in this company case, choose that corresponding I'm gonna take a choose function and then I'm gonna embed a match function because I wanna match to my toggle case, which is anchored the names of my three cases, which are also anchored and I want them to be exact matches. So I put a zero and now I can go back to the choose function. So I have a comma here for the remainder arguments of the choose function, which are going to be to choose either the company case, the bank case, or the downside case. And if I hit Enter, what it's doing is it's looking and see that I have the company case selected. It's looking for the company case in my labels in column B and then it's giving me my company assumption. So now I can go ahead and copy that to the right. And I have completed the US sales growth.