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Goal seeking

 

The ability to calculate a formula backward to obtain a desired input. For example, given the goal gross margin = 50% and the range of possible inputs, goal seeking attempts to obtain the optimum input.

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Accounting Dictionary: Goal Seeking
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Situation in which a manager wishes to determine what change would have to take place in the value of a specified variable in a specified time period to achieve a specified value for another variable. For example, a manager can ask the following "goal seeking" question: "What would the unit sales price have to be for the project to achieve a target return on investment of 20%?" A well-known financial planning package such as the Interactive Financial Planning System (IFPS) can help answer this type of question.

Wikipedia: Goal seeking
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In computing, goal seeking is the ability to calculate backward to obtain an input that would result in a given output. This can also be called what-if analysis or back-solving. It can either be attempted through trial and improvement or more logical means. Basic goal seeking functionality is built into most modern spreadsheet packages such as Microsoft Excel.

Examples

Suppose a family wanted to take out the biggest loan that they could afford to pay for. If they set aside $500 dollars a month, the goal-seeking program would try to work out how big a loan the family could afford to take out. Even using simple trial and improvement, a computer could quickly determine that they could not afford $50,000 loan, but could afford a $48,000 loan. It would then become repeat the process until it had reached a figure such as $48,476.34, which would give them a monthly repayment as close to, but not exceeding, $500, as possible.

A more efficient method, especially on more complicated calculations, would be for the program to logically work through the argument. By drawing up a simple equation, the program could come to the conclusion that the output equalled one ninety-sixth of the input, and could then multiply the output (or goal) by ninety-six to find the necessary input.

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Accounting Dictionary. Dictionary of Accounting Terms. Copyright © 2005 by Barron's Educational Series, Inc. All rights reserved.  Read more
Wikipedia. This article is licensed under the Creative Commons Attribution/Share-Alike License. It uses material from the Wikipedia article "Goal seeking" Read more