Goal Seeking

AAA

DEFINITION of 'Goal Seeking'

The process of finding the correct input when only the output is known. A goal-seeking entrepreneur might ask him or herself: "How much money do I have to earn per hour to gross $100,000 this year?" He or she knows the desired output, $100,000, but will have to work backwards to determine the desired input by figuring out how many hours he or she is able and willing to work in a year and then how much he or she needs to earn per hour, along with any other factors which may affect the final output.

INVESTOPEDIA EXPLAINS 'Goal Seeking'

To solve more complex goal-seeking problems, business people commonly rely on computer software. The spreadsheet program Microsoft Excel has a goal-seeking tool built in that allows the user to determine the correct input value for a formula when the desired output is known. This feature can be used, for example, to determine the interest rate a borrower would need to qualify for (the input) if he or she only knows how much he can afford to pay per month (the output).



RELATED TERMS
  1. Magic Formula Investing

    A money-making strategy that teaches investors a common-sense ...
  2. Coinsurance Formula

    The homeowners insurance formula that determines the amount of ...
  3. Unit Benefit Formula

    A method of calculating an employer's contribution to an employee's ...
  4. Flat Benefit Formula

    A method of calculating an employer's contribution to an employee's ...
  5. Formula Investing

    A method of investing that rigidly follows a prescribed theory ...
  6. Future Value - FV

    The value of an asset or cash at a specified date in the future ...
RELATED FAQS
  1. Why was Microsoft subject to antitrust charges in 1998?

    On May 18, 1998, the Department of Justice filed antitrust charges against Microsoft (Nasdaq:MSFT ). The charges were brought ... Read Full Answer >>
  2. What risks does a business owner face under a business structure with unlimited liability?

    The risks that a business owner faces under a business structure with unlimited liability are literally unlimited, but they ... Read Full Answer >>
  3. How do I set up a Limited Liability Company (LLC)?

    The specific process and procedures for organizing a limited liability company (LLC) vary from state to state. However, the ... Read Full Answer >>
  4. What is a "linear" exposure in Value at Risk (VaR) calculation?

    A linear exposure in the value-at-risk, or VaR, calculation is represented by positions in stocks, bonds, commodities or ... Read Full Answer >>
  5. What is the criteria for a simple random sample?

    Simple random sampling is the most basic form of sampling and can be a component of more precise, more complex sampling methods. ... Read Full Answer >>
  6. What are some examples of ways that sensitivity analysis can be used?

    Sensitivity analysis is an analysis method that is used to identify how much variations in the input values for a given variable ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Investing With A Purpose

    Your reasons for investing are bound to change as you go through the ups and downs of life. Setting goals is the first step in determining which investment vehicles are right for you.
  2. Retirement

    Financial Planning: It's About More Than Money

    Determine what you need to do now to make a drastic lifestyle change later.
  3. Professionals

    Microsoft Excel Features For The Financially Literate

    Here are some of Excel's functions and features that a financial professional can use to make his or her job more efficient.
  4. Entrepreneurship

    Run Your Finances Like A Business

    Think of yourself as your own little company. To make it run smoothly, you need to take a look at your books.
  5. Markets

    The Story Of Zipdial's Success

    Here is how ZipDial formed and subsequently shot to success in the Asian market.
  6. Investing

    The Strong Dollar’s (Real) Toll On Tech Stocks

    A large portion of U.S. technology companies’ sales occur overseas, given the strong international business and consumer demand from many U.S. tech firms.
  7. Fundamental Analysis

    How to Calculate a Coverage Ratio

    In broad terms, the higher the coverage ratio, the better the ability of the enterprise to fulfill its obligations to its lenders.
  8. Economics

    Explaining the Cash Budget

    A cash budget is a plan for the inflows and outflows of cash for a business or an individual.
  9. Entrepreneurship

    Can I Become An Angel Investor?

    Because of SEC rules, you already need significant assets to become an angel investor.
  10. Economics

    Tech Startup Momentum Being Generated In Detroit

    Rising from the ashes in the once proud auto-manufacturing City of Detroit is a rapidly emerging tech startup scene that could prove to be its salvation.

You May Also Like

Hot Definitions
  1. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  2. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  3. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  4. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  5. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  6. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
Trading Center