Key Assumptions

Financial models often depend on a handful of critical inputs: unit prices, growth rates, headcount figures, cost percentages, and similar parameters. In a complex model these assumptions can be scattered across dozens of worksheets, making it difficult to review them, adjust them for scenarios, or perform sensitivity analysis.

The Key Assumptions feature solves this problem by consolidating your most important modeling inputs into a single, dedicated worksheet.

Why Centralize Assumptions?

Consider a model with ten business units, each with its own revenue worksheet. If the average selling price is embedded deep inside each unit's formulas, changing it for a sensitivity run means editing ten different cells across ten worksheets. With Key Assumptions enabled, all ten worksheets reference a single cell on the Key Assumptions worksheet. Change it once, and every linked account updates automatically.

This design pattern is standard practice in professional financial modeling. It provides:

• Transparency — reviewers can see all critical inputs at a glance.
• Efficiency — scenario analysis requires changing only the KA worksheet.
• Auditability — assumptions are documented in one place rather than buried in formulas.

Settings

Generate Key Assumptions

Toggle this on to include a Key Assumptions worksheet in the generated Excel model. When enabled, the pipeline creates a dedicated sheet listing every linked assumption with its value for each period.

Link Accounts

Toggle this on to make eligible accounts reference the Key Assumptions worksheet instead of containing their values directly. When linking is active, the account worksheets contain formulas that point to the KA sheet rather than hardcoded numbers.

Both toggles must be enabled for the full Key Assumptions workflow to function. You can generate the KA sheet without linking (useful for documentation), but linking without generating will have no effect.

Which Accounts Can Be Linked?

Not every account type is suitable for centralization. Accounts are eligible for Key Assumptions linking when their sheet type is one of the following:

| Sheet Type | Description | Example | |------------|-------------|---------| | Price | A per-unit price assumption | Average selling price per widget | | Quantity | A volume or count assumption | Units sold per month, headcount | | Percentage | A rate expressed as a percentage | Revenue growth rate, tax rate | | Days | A duration measured in days | Days Sales Outstanding, payment terms |

These sheet types naturally represent single-point assumptions that analysts frequently adjust. Account types like Sum or Formula derive their values from other accounts and are not linked.

How Linking Works in the Generated Model

When both Generate and Link are enabled, the pipeline performs the following:

1. Creates a Key Assumptions worksheet with one row per linked account.
2. Populates each row with the account's values across all projection periods.
3. Replaces the values in the original account worksheets with cell references pointing to the KA worksheet.

The result is a model where the KA worksheet is the single source of truth for all linked assumptions. Analysts modify values on the KA sheet, and every dependent calculation updates through Excel's formula chain.

KA Offset

The KA Offset is a layout parameter that controls where assumption values begin on the Key Assumptions worksheet. It determines the column position offset, ensuring the period columns on the KA sheet align properly with the rest of the model. In most cases the default value works correctly, but you may need to adjust it if you have customized the model's column layout.

Practical Workflow

1. Define your accounts in the Accounts section, assigning appropriate sheet types (Price, Quantity, Percentage, or Days) to assumption-driven accounts.
2. Enable Generate Key Assumptions in this section.
3. Enable Link Accounts to activate formula linking.
4. Build the model. The pipeline creates the KA worksheet and links all eligible accounts.
5. Open the generated Excel file. Navigate to the Key Assumptions sheet to review and adjust inputs.

Tips for Effective Use

• Be selective with sheet types. Only assign Price, Quantity, Percentage, or Days to accounts that genuinely represent adjustable assumptions. Overusing these types clutters the KA worksheet.
• Name accounts clearly. Since the KA worksheet lists account names, descriptive names like "Average Selling Price - Product A" are far more useful than cryptic codes.
• Use the KA sheet for scenario analysis. Copy the KA worksheet to create alternative scenarios, then compare results across different assumption sets.