Following the analysis of the last posting, we know how to do a Regression Tornado. Now doing a little math, we can change the standardized coefficients to dollar values and identify the monetary impact. For example, a standard deviation increase in Unit Sales Y1 impacts the NPV by $ 6 million, and one sigma Growth Rate changes the NPV by one million.
Case study: We need to increase the NPV by $5
million. What do we need to do?
To achieve this goal we need to raise 21
million units in the Units Sales Y1 which is feasible given the 30 million units gap between
the baseline and the best scenario in our model. On the other hand, to achieve the same goal
using Growth Rate we need to boost growth sales by 3.5%.
Here is the link with the Excel file. If you found this helpful, please share.
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