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	MODEL ASSUMPTIONS
	Monte Carlo Simulation — Financial Risk Analysis
	SIMULATION PARAMETERS
	Parameter	Value	Unit	Description	Min	Max	Notes
	Number of Iterations	1,000	Iterations	Total Monte Carlo simulation runs	100	10000	Higher = more accurate, slower
	Random Seed	42	Integer	Seed for reproducible results	1	99999	Set to 0 for random each run
	Confidence Level (Primary)	95.0%	%	Primary confidence interval	90.0%	99.0%	Industry standard: 95%
	Confidence Level (Secondary)	99.0%	%	Secondary confidence interval	90.0%	99.9%	For extreme tail risk
	Projection Horizon	5	Years	Forecast period length	1	10	Annual periods
	REVENUE ASSUMPTIONS
	Parameter	Value	Unit	Description	Min	Max	Notes
	Base Revenue (Year 0)	50,000,000	$	Current annual revenue	10000000	500000000	Sample: $50M base
	Revenue Growth Rate (Mean)	8.0%	%	Expected annual growth rate	-0.1	0.3	Normal distribution applied
	Revenue Growth Volatility	5.0%	%	Std deviation of growth rate	0.01	0.2	Measures growth uncertainty
	Revenue Distribution Type	Normal	Type	Probability distribution model			Normal / Lognormal / Triangular
	Volume (Units Sold)	500,000	Units	Annual units sold	100000	2000000	Sample data
	Price Per Unit (Mean)	$100	$/Unit	Average selling price	20	500	Sample data
	Price Volatility	3.0%	%	Std deviation of price changes	0.01	0.15	Measures pricing uncertainty
	Demand Elasticity	-1.2	Coefficient	Price sensitivity of demand	-3	0	Negative = inverse relationship
	COST ASSUMPTIONS
	Parameter	Value	Unit	Description	Min	Max	Notes
	COGS as % of Revenue (Mean)	55.0%	%	Cost of goods sold ratio	0.3	0.8	55% gross margin target
	COGS Volatility	3.0%	%	Std deviation of COGS %	0.01	0.1	Measures cost uncertainty
	Operating Expenses (Base)	$12,000,000	$	Annual fixed operating costs	1000000	100000000	Sample: $12M OpEx
	OpEx Growth Rate (Mean)	4.0%	%	Expected annual OpEx growth	0	0.15	Inflation + expansion
	OpEx Volatility	2.0%	%	Std deviation of OpEx growth	0.005	0.1	Measures OpEx uncertainty
	Depreciation & Amortization	$3,000,000	$	Annual D&A expense	500000	20000000	Sample: $3M D&A
	Interest Rate (Mean)	5.0%	%	Cost of debt	0.01	0.15	Normal distribution applied
	Tax Rate	25.0%	%	Effective corporate tax rate	0.15	0.4	Assumed constant
	CORRELATION MATRIX
		Rev Growth	COGS %	OpEx Growth	Price Chg	Interest Rate
	Revenue Growth	1.00	-0.30	0.50	0.60	-0.10
	COGS %	-0.30	1.00	0.40	-0.20	0.20
	OpEx Growth	0.50	0.40	1.00	0.10	0.30
	Price Change	0.60	-0.20	0.10	1.00	-0.15
	Interest Rate	-0.10	0.20	0.30	-0.15	1.00
	PORTFOLIO & DEBT ASSUMPTIONS
	Parameter	Value	Unit	Description	Min	Max	Notes
	Total Debt	$20,000,000	$	Outstanding debt balance	0	200000000	Sample: $20M debt
	Total Equity	$30,000,000	$	Equity value	1000000	500000000	Sample: $30M equity
	Portfolio Value	$50,000,000	$	Total portfolio (Debt + Equity)			Calculated: Debt + Equity
	Portfolio Return (Mean)	10.0%	%	Expected annual return	-0.5	0.6	Normal distribution applied
	Portfolio Volatility	15.0%	%	Annualized std deviation	0.05	0.4	Measures portfolio risk
	Risk-Free Rate	4.0%	%	Benchmark risk-free rate	0.01	0.08	US Treasury rate proxy
	SCENARIO PROBABILITY WEIGHTS
	Scenario	Probability	Rev Growth Adj	COGS Adj	OpEx Adj	Description
	Bull Case	20.0%	4.0%	-3.0%	-1.0%	Strong growth, cost efficiency
	Base Case	50.0%	0.0%	0.0%	0.0%	Expected outcome
	Bear Case	20.0%	-5.0%	4.0%	2.0%	Recession / headwinds
	Stress Case	10.0%	-12.0%	8.0%	5.0%	Severe downturn / crisis
	Total Probability	100.0%	✓ Valid
	NOTES
	• Blue values are user inputs — modify these to customize the simulation
	• Black values are calculated formulas — do not manually edit
	• All sample data is illustrative — replace with actual company data for analysis
	• Correlation matrix values significantly impact simulation outcomes — calibrate carefully