financial planning system

financial planning system

Software that helps the user evaluate alternatives. It allows for the creation of a data model, which is a series of data elements in equation form; for example, gross profit = gross sales - cost of goods sold. Different values can be plugged into the elements, and the impact of various options can be assessed (what if?).

A financial planning system is a step above a spreadsheet by providing additional analysis tools; however, increasingly, these capabilities are being built into spreadsheets. For example, sensitivity analysis assigns a range of values to a data element, which causes that data to be highlighted if it ever exceeds that range.

Goal seeking provides automatic calculation. For example, by entering gross margin = 50% as well as the minimums and maximums of the various inputs, the program will calculate an optimum mix of inputs to achieve the goal (output).

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financial planning system [fī¦nan·chəl ′plan·iŋ ‚sis·təm]

(computer science)

A decision-support system that allows the financial planner or manager to examine and evaluate many alternatives before making final decisions, and which employs the use of a model, usually a matrix of data elements which is constructed as a series of equations.