What does the term "what-if analysis" refer to in spreadsheet software?

The term "what-if analysis" in spreadsheet software refers to the process of simulating various scenarios to see how changes in input values affect the outcome. This technique allows users to make informed decisions based on different possibilities by adjusting variables and observing potential results. For example, one might explore how changing sales figures, interest rates, or expense amounts could impact profit margins.

This analytical capability is particularly important because it enables users to assess the implications of their decisions before executing them in real life, effectively aiding in strategic planning and forecasting. By using what-if analysis, users can visualize potential outcomes and better prepare for different situations by considering a range of alternatives.