By including examples where appropriate, describe a basic structure for this model.

Suggest how the reliability of the model could be tested.

The company has established certain profit targets that it wishes to achieve over the next three years.

Explain how this model can be used to investigate different strategies that will reach these targets.

Award up to [6 max].
Different sheets will be dedicated to different categories, e.g. salaries, running
expenses, sales, different products, different months etc.;
Note: Award [2 max] for identifying at least two categories.

Each sheet will contain a list of items for that category including associated values;
Formulas will be included as necessary;
Each sheet/category will include a formula that totals the values in that category;
Intermediate values will be calculated, e.g. tax to be paid;
The final profit will be determined from the previous totals;

Figures from previous years can be entered into the model;
With the results checked against the previously calculated results;

Award up to [4 max].
Different (“what-if”) scenarios can be run;
In which the values of different variables are changed;
For example, the number of items sold / the increase in the level of salaries;
Note: Award [2 max] for identifying at least two items.

Selling prices/other (acceptable) parameters can be adjusted to achieve the desired profit;