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Excel Basics

Summer 2008

Working Without the Mouse


It is important to be able to work without the mouse in Excel Mastering this will

Increase productivity and efficiency Need proof? Check this out: http://www.dealmaven.com/products/fasttrackXL/timesavings.aspx

Menu Items

Alt: selects the menu bar Once the menu bar is highlighted, use underlined letters to navigate through the menus Example: Alt + F opens the File menu Esc: exits out of the menu bar allowing you to continue to work in the spreadsheet

Keystroke Shortcuts

A shortcut is a series of keys that allows you to perform a specific function without using the menu bar When a specific menu bar is open, the shortcuts are listed on the right Ctrl + Letter Example: to open a new workbook, select either: Alt + F + N Ctrl N

Dialog Box

Some menu items contain a dialog box Cycle through the pages using either the arrow keys or Ctrl + Tab

To cycle in reverse use Ctrl + Shift + Tab

Use Alt + Underlined letter to enter a selection on a page You can also use Tab to maneuver through a page

To cycle in reverse, use Shift + Tab

After selecting items, press Enter to save and close or Ctrl + Tab to move to another page Esc will escape the dialogue box without saving any changes

Dialog Box Example


To make changes to the font: Alt + O + E Use the Ctrl + Tab to move across the pages to the Font page Press Alt + Underlined letter to make changes, or use Tab to cycle through the options on the page

Alt + S allows you to change the size of the font

Press enter to accept those selections

Changing Applications

Cycling through open applications:

Use Alt + Tab It is helpful to have windows cycle through only open applications as opposed to all open files

To do this, select Alt + T + O, then go to the View page and disable the setting for Windows in Taskbar (Alt + W) Now Alt + Tab will cycle through all open applications and not each open workbook

Cycling through open workbooks in Excel:

Use Ctrl + Tab to cycle through all open workbooks in Excel

When to Copy vs. Cut

Copy

Copies existing cells and pastes a duplicate of the copied cells in another area of your worksheet Leaves original cells in place, as well as any equations that referenced those formulas To use copy:

Highlight desired cells Alt + E + C, or Ctrl + C

Cut

Removes a group of cells and places them in another area of your worksheet, all equations that referenced cut formulas update to the new location of the cells To use cut:

Highlight desired cells Alt + E + T, or Ctrl + X

Copy vs. Cut Example


Cut (Ctrl X, enter) Notice the sum still references A2:A6, and while the result has moved from A7 to cell C7

Original Formula

Copy (Ctrl C, enter) Notice the original sum is still in cell A7, and the copied cells no longer reference the original cells

Undo and Redo

Undo: Undoes the previous action


Redo: Returns the previous undone action


Includes formatting and calculations Undo can undo a series of the last several actions of both formatting and calculations Alt + E + U or Ctrl Z

Includes formatting and calculations Redo can redo a series of the last several undone actions of both formatting and calculations Alt + E + R or Ctrl Y

Using Go To

Go To allows you to locate:


cell references named ranges and cells

To open the Go To dialog box, use F5 Example: Enter B138 in the Reference: text field to locate cell B138. F5 & Enter to return

Working in a Spreadsheet

Selecting a range of cells

Hold Shift and use the arrow keys to select a range of cells

The range can be vertical, horizontal or both

Ctrl + Shift + arrow keys will select an entire contiguous groups of cells
F2 allows you to edit a formula There are two different modes for editing formulas:

Editing a formula

Edit mode: Using the arrow keys will move the cursor in the formula bar to allow for direct editing of the formula (arrow keys control the formula bar) Enter mode: Using the arrow keys will select additional cells for the formula (arrow keys control movement in the spreadsheet) Use F2 to toggle between these two modes

Moving to a different worksheet within the same workbook

Use Ctrl + Page Up or Ctrl + Page Down

Delete vs. Shift Rows Up


Be aware of the difference between delete and shift rows up Deleting erases the value or function in the selected cell, leaving others around it untouched

Delete cells or entire rows when possible

Shifting rows up moves the values below the selected cell up a row

Shifting cells of rows up is not a modeling best practice as it will incorrectly alter the alignment of your data

Delete vs. Shift Cells Up (contd)


Original table

Deleting the cell erases only the value in the selected cell.

Shifting cells up moves the 5.2 (2006s prepaid expenses) into the inventory position. This is incorrect!

Paste vs. Paste Special


When a cell is copied, both the formula and formatting for that cell are copied Paste

Pastes copied cells, both formula and formatting To use paste:

Alt + E + P, or Ctrl P

Paste Special

Pastes specific things about the copied cells such as:


Only formulas Only formats Alt + E + S

To use:

Tip Paste special is a big time saver for formatting a spreadsheet, once you have a few rows formatted, you can paste that formatting down the page without worrying about formulas

Absolute vs. Relative Cell References Overview

A relative cell reference tells Excel that the cell used in a formula depends on the location of that formula

This is the default cell setting

A complete absolute cell reference tells Excel the exact cell that will always be used (locked) in the formula regardless of the location of that formula

Use $ to signify an absolute reference

A partial absolute reference tells Excel that only part of the reference (either the row or column) is locked

Tip F4 will cycle through $ applications of $A$1, A$1, $A1, and A1

When the formula is copied across, B4 will remain locked while C4 will update with each new column as the formula is copied

Relative References

Relative References

Default Excel reference Allows formulas to be copied while updating cell references D4 and E9 are relative references As you can see, they change to E5 and F10 when the formula is copied right and down

In this example:

The column has increased by one (from D to E and E to F) The row has increased by one (from 4 to 5 and 9 to 10)

Absolute References

Absolute References

Allows cell references to be locked and thus not updated when formulas are copied Rows, columns or both can be locked by use of dollar sign ($) Examples

Lock Column: $A1 Lock Row: A$1 Lock Row and Column: $A$1

In this example:

Each cell in the row depends on the income tax rate of 38% (C19)

Thus, column C of cell C19 is locked ($C19) to prevent it from changing when copied across the row However, D18 should change with each year, therefore it remains unlocked

Partial Absolute References An Example

A times table can be created with a single formula copied down and across. In this example:
Row 2 values need to be locked (C$2) Column B valued need to be locked ($B3)

Incorrect

Correct

Solving Equations with Operators


After inputting data, use an operator to solve an equation Excel recognizes +, -, *, / Begin all equations with an = sign

Select any necessary cells to complete the equation Press enter after completing the equation to return the result

The formula can be entered into either the active cell or the formula bar

Next, select the cell to be included in the equation Type the operator of your choice

Solving Equations with Functions

The values included in the function can be separated by

: for a range , for individual values : and , for a combination

Text in a function is always place in quotations Syntax in brackets [ ] is optional and can be left out without effecting the function

Solving Equations with Functions

Excel functions make it easier to do many essential tasks such as summing or calculating the average, maximum, or minimum value from a set of data Functions can either be entered in the formula bar or active cell Excel will provide the syntax below the formula bar Always begin a formula with =, followed by the name of the function Enclose the contents of the function with ()
Example: =sum(B2:B4) for a sum function

Solving Equations with Goal Seek

Goal Seek is used for what-if analysis

By selecting OK after the analysis, you are telling Excel to accept the changes made by goal seek and change your original spreadsheet By selecting Cancel after the analysis, you are telling Excel to reject the changes made by goal seek and leave your original spreadsheet unaltered

Use when the desired result of a single formula is known, but the input value needed to determine the formula result is unknown Alt + T + G

Set cell must include a formula


By changing value must be a single cell

Goal Seek (contd)

In this Example:

Left: shows the original interest rate and payment A goal seek was performed to determine the interest rate required for a monthly payment of $2000 Right: Goal seek has found that an interest rate of 7.02% would be required

Notice that goal seek changed the values of the interest rate and payment. Selecting OK will save these changes will Cancel will return the original values

Inserting Copied Rows

Inserting copied rows allows for easy copying of formats, row headers, etc. Shift + Spacebar along with the arrow keys to select rows to be copied Ctrl + C to copy cells Select portion of your worksheet where the copied rows will be inserted Alt + I + E to insert copied rows

Select cells and then copy

and insert using Alt + I + E

Named Ranges

Excel allows a cell or a group of cells to be named This makes referencing cells in formulas easy

Especially if you find yourself often referencing the same cell Example: By naming cell B3 ir, you can type ir (no quotations) into any formula that uses that interest rate instead of typing B3

Alt + I + N + D
Warning If a worksheet containing a named cell is duped, then multiple cells will contain the same name throughout the workbook.

Finding Named Cells Using Go To

What happens when you have named a cell and forget where it is? F5 will allow you to see all named cells and it will take you to their locations on the spreadsheet. Use Tab and the arrow keys to move between different cells or type in a cell reference directly

Ex: Cell B2 was named rate. F5 brings up the names of all named cells and will take you to B2 if rate is selected.

Color Coding

Makes it easier to read a model and discern formulas from inputs: Formulas: Black

Example: =B2+C9 Example: =3.14159 Contains both an input and cell reference

Inputs: Blue

Partial Input: Red


Example: =3.14*C2 It would be better to input the 3.14 into a cell and reference it in the multiplication formula

This is generally NOT a good practice

Formatting Cells

Alt + O + E

Font page: change the font type, style, size, or color Format page: specify the formatting of characters in a cell as either text or a number

Number formats will truncate 0s Add specific formats (i.e. currency, percentage, time, accounting)

Patterns tab: shade a cell Bold: Ctrl + B Underline: Ctrl + U Italicize: Ctrl + I

Helpful shortcuts:

Using Custom Number Formats

Custom Number Formats allow formatting outside of those bundled with Excel Alt + O + E, then go to the Number page

Hit Alt + C and select Custom from the bottom of the list

The syntax is: POS;NEG;ZERO;TEXT

Check Excels Help for more syntax notes

Example: Yes/No Trigger

Syntax: Yes;ERROR;No;ERROR Returns Yes for any positive number, No for zero and ERROR for any negative number or text

Using Indents

Indenting enhances readability One way to indent is to add spaces before the text

Example: Cash However, if you reference this cell, you will be forced to include the indenting

To use indenting:

Alt + O + E and go the Alignment page Alt + H to choose left or right indent Alt + I to change the indent number according to the severity of the indent

Using an indent formats the cell as opposed to having the indent be a part of the text

Conditional Formatting

Allows for formatting cells based on certain criteria Select Alt + O + D to bring up the dialog box Use the drop down menus to input commands Alt + F to create the format Example: To format negative numbers as red and positive numbers as green, highlight cells and apply the formatting shown on the right

Use the Add >> button to add additional conditions

OFFSET Function

Returns a cell value that is a specified number of rows and columns from a particular cell The value returned can be a single cell or a range of cells Syntax: =OFFSET(reference,rows, columns,[height],[width])

Reference: specifies where on the spreadsheet Excel should start

E7 is the reference cell in this example

Offset will then move the specified number of columns and rows from the reference

In this example, Excel will move 2 rows down (E7) and 0 columns across

By changing the number in cell C3 from 2 to 1, the values in cells E10:H10 will change accordingly to 10%

OFFSET Function (contd)


Notice that the active case number determined the growth rate which will be used to calculate projected revenue.

Rows can be grouped (as done with rows 8 and 9) and hidden (indicated by the + sign to the left of row 10) so that only the growth rate that corresponds with the active case will be visible. This concept will be further demonstrated in the modeling section.

Named Ranges Revisited


As we said, named cells can be used in formulas Lets try naming the reference cell in our OFFSET function to illustrate this

Name cell C4 Active by selecting Alt + I + N + D

F5 allows you to see all of the named cells and ranges in your worksheet

VLOOKUP and HLOOKUP: General Info


Functions that allow you to look up values in a table of data Required syntax

Lookup_value: value to be found in the first row (HLOOKUP) or column (VLOOKUP) of the table

Can be a value, a reference, or a text string Reference either a range of cells or a range name

Table_array: table of information in which data is looked up

Row_index_num: row number in table_array from which the matching value will be returned

Used in an HLOOKUP A row_index_num of 1 returns the first row value in table_array, a row_index_num of 2 returns the second row value in table_array, etc.

Col_index_num: column number in table_array from which the matching value must be returned.

Used in a VLOOKUP A col_index_num of 1 returns the first column value in table_array, a col_index_num of 2 returns the second column value in table_array, etc.

VLOOKUP and HLOOKUP Cont.

Optional Syntax

Range_lookup: logical value that specifies whether you want LOOKUP to find an exact match or an approximate match.

Optional syntax for both HLOOKUPs and VLOOKUPs If TRUE or omitted, an approximate match is returned. If FALSE, HLOOKUP will find an exact match. If one is not found, the error value #N/A is returned.

VLOOKUP

Searches for a value in the first column of a table and returns a value in the same row from another column in the table The V in VLOOKUP stands for vertical

VLOOKUPS are used only with vertically organized tables

Syntax: =VLOOKUP(lookup_value, table_array, col_index_num, [range_lookup])

HLOOKUP

Searches for a value in the top row of a table and returns a value in that same column from a row you specify in the table The H in HLOOKUP stands for horizontal

HLOOKUPS are used only with horizontally organized tables

Syntax: =HLOOKUP(lookup_value,table_array,row_index_num, [range_lookup])

A1 vs. R1C1 Cell References

A1 Reference style:

Excels default style, which refers to columns with letters and refers to rows with numbers (row and column headings) For example, B2 refers to the cell at the intersection of column B and row 2

R1C1 Reference Style

Useful for computing row and column positions in macros (MUST TURN THIS FEATURE ON) Tools Options General Excel indicates the location of a cell with an "R" followed by a row number and a "C" followed by a column number.

= INDIRECT(ref_text,a1)

Use INDIRECT when you want to change the reference to a cell within a formula without changing the formula itself

If a1 is FALSE, ref_text is interpreted as an R1C1-style reference

INDIRECT Function (contd)


The formula in C3 returns 4.25. =Indirect(A3) tells excel to look to A3 for instructions. A3 includes the value B3 directing Excel to return the value in cell B3.

Note: Cell B5 is named Payment The formula in C5 returns 122. =Indirect(A5) tells excel to look to A5 for instructions. A5 says Payment directing Excel to return the value of the cell named Payment which is B5.

Avoid Merging

Merging cells can make it hard to copy, insert, or delete cells A better approach is to format the cells using Center Across Selection

Alt + O + E Go to the Alignment page and hit Alt + H

This method allows text to be centered over the range of cells without merging

Avoid Spacer Columns

Spacer columns used to separate underlined adjacent cells hurt the ability to fluidly copy formulas across A better approach is to format the adjacent cells to Center Across Selection (prior slide) and then apply a Single Accounting Underline from the Underline drop box on the Font page

Dont do this!

Alt + O + E Go to the Font page and hit Alt +U

Use a Single Accounting Underline

This achieves a similar format as borders & spacer columns without the mess

Save vs. Save As

Save

Saves a file by updating from the previous save To use save:

Alt + F + S

Save As

Saves the file under a different name creating two identical documents with different names

This is beneficial because a file can be altered without changing the original file (i.e. using a template)
Alt + F + A

To use save as:

Printing- Page Setup


Alt + F + U

The page tab allows you to choose the print layout of your worksheet

Formatting for Printing


A good way to setup your page is to scale the page to fit 1 page wide while not specifying how many pages tall This will ensure that your printed model does not run off the side of the page To scale your workbook, select Alt + F + U, go to the page titled Page and select Alt + F for Fit to: and specify 1 page(s) wide, while not inputting a value for page(s) tall

Page Setup (contd)

The Sheet tab allows you to choose print properties such as the appearance of gridlines or to repeat row and column headings at the top of each page

Page Setup Cont.

The Header/Footer tab is located in the Page Setup menu and contains a feature called Custom Header which allows for additional options

Print Area

Allows you to specify the area you wish to fit on a single page Highlight the desired cells Alt + T + S will set the print area Alt + T + C will clear the area you have previously set

Print Preview and Print


Alt + F + V Allows you to view your document exactly as it will be printed Alt + F + P to print Here, you may choose:

Number of copies Which pages you would like printed The order in which your worksheets will be printed The printer you wish to use

Full Menus

The following are several options to gear Excel more towards power users Enable Full Menus

Forces Excel to show full menus Alt + T + C Check Always show full menus

Alt + N

Data Entry Options

Unless you are conducting heavy data entry, it is helpful to turn off move selection after entry Turning off this feature will keep Excel in the same active cell after pressing Enter when writing formulas (instead of moving down a row) To do this:

Alt + T + O, select the Edit page, then hit Alt + M to disable

Editing Options

Editing in the formula bar instead of the cell can make formula writing easier To do this you need to disable the Edit directly in cell feature Alt + T + O then go to the Edit page Hit Alt + E to disable Edit directly in cell Only allows formula editing in the Formula bar This is beneficial when creating long formulas

When long formulas are being edited in the cell directly, the formula has the tendency to spill over onto other cells in the worksheet making it difficult to see those cells and reference them in the formula

Triggers

Triggers are used to give greater flexibility to a model by allowing the user to determine whether or not a formula should calculate

Triggers can used to determine whether or not entire formulas or just component pieces of formulas should calculate IF statement Multiply by 0 or 1

Methods for using triggers:

Triggers: Using an IF Statement


Use an IF statement to determine whether or not the formula (or component of the formula) should calculate Example

In the example below, anytime the text yes is in cell B2, the $5 of Target will be added to the $10 of Acquirer Otherwise, the formula will only show the $10 of Acquirer

Note that the IF statement if effective, but not the most robust method for formula writing

Example: Someone could type Y or Yeah meaning yes and Excel would still evaluate the statement to not include the $5 of Target

Trigger

Result: 15

Using a 1/0 (Yes/No) Trigger

Instead of using an IF statement with text, set the trigger to either 1 or 0

Trigger

When the trigger is 1 it will multiply 1*B5, which will include B5 in the calculation When the trigger is set to 0 will multiply 0*B5, and it will therefore drop out of the calculation without effecting any other part of the calculation In this example, when B2=1 the result is 15, when B2=0 the result is 10

Tip Notice in the picture below that cell B2 still contains the number 1, but the text yes is displayed. This is a custom number format explained in the following slide.

Using Custom Number Formats

Custom Number Formats allow for formats outside of those bundled with Excel Alt + O + E, on the Number page, the last option under Category (Alt + C) The syntax is: POS;NEG;ZERO;TEXT

Not all arguments are required when creating a custom format Check Excels Help for more syntax notes Syntax: Yes;ERROR;No;ERROR Returns Yes for any positive number, No for zero and ERROR for any negative number or text

Example: Yes/No Trigger

Understanding Errors

#NAME?

Using a name that does not exist Misspelling a name Misspelling the name of a function Entering text in a formula without enclosing the text in double quotations (text) Omitting a colon (:) in a range reference Referencing another sheet not enclosed in single quotations (sheet)

#DIV/0

Entering a formula that contains explicit division by zero

Example =5/0

Using a cell reference to a blank cell of a cell that contains zero as a divisor

Understanding Errors (contd)

#REF

Deleting cells referred to by other formulas Pasting moved cells over cells referred to by other formulas Using a link to a program that is not running

#VALUE

Entering text when the formula requires a number or logical value (true/false) Supplying a range to an operator or a function that requires a single value, not a range Entering a cell reference, formula, or function as an array constant
Tip Excels Help feature can provide assistance in troubleshooting additional errors. Simply type the specific error in the search bar.

ISERROR

The ISERROR formula tests if A2 contains an error value. If it does, the IF statement tells excel to return N/A to improve the worksheets clarity. If not, the IF statement tells excel to return the value of A2.

Troubleshooting #REF - Example


Suppose cell E3 is used by numerous cells in your model, but you dont realize it.

If you cut another cell (Ctrl x) and paste it over cell E3, then any cells that use E3 in their own formulas will now have a #REF! error. The same thing happens if you highlight row 3 and run Edit Delete.

If you are considering deleting a row or group of rows, it can be difficult to know ahead of time whether there are important cells in it. You can run Tools Formula Auditing Trace Dependents, but you need to do this one cell at a time!

Note: There are more details about tracing dependents in the Menu Items slide deck

Troubleshooting #REF (contd)

What if there are tons of #REF errors on your worksheet? How do you fix them?

The key is to identify the root source of the #REF! state. Do a Find (Ctrl + F) using the settings shown below, searching within formulas instead of values for #REF. This will take you to the cells that had relied on the section you obliterated. All you need to do is fix the cell or row which has caused the problems, and your entire worksheet will be restored!

Circular References

Circular References occur when a formula refers, either directly or indirectly, back to its own cell The text Circular or Calculate will be displayed in the status bar if a circ is present Close all other files to narrow down the circ to a certain workbook Use the Circular Reference Toolbar to resolve the circ

Notice how A30 is an input to cell A30, causing a circular reference. Use the Trace Precedents function to locate all inputs. Also notice the text Circular: A30 in the status bar indicating the circ

Alt + V + T (select Circular Reference Toolbar)

Iteration

By turning Iteration on, Excel will attempt to solve for any circs in the spreadsheet. When modeling, it is best to operate with Iteration turned off until the model is finished. Alt + T + O + C

Troubleshooting Errors- Formula Auditing


Formula Auditing aids in troubleshooting errors. With the cell containing the error selected, Alt + T + U + E traces the error

Tracing errors shows the cells referenced by the cell that contains an error. In this case, division by zero occurred.

Tracking Precedents in Native Excel


Provides the ability to track which cells feed a certain cell Ctrl + [ to highlight precedent cells

Precedent
Function Precedent

Hit Tab to cycle through each precedent In the example below, A1, B2, and B3 are precedents of B5

Example

Original equation

Cells B2, B3, and B4 are precedents of B5

Tracking Dependents in Native Excel

Tracing dependents provides the ability to track which cells reference a certain cell Use Ctrl + ] to highlight the dependent cells

Dependent Function Dependent

Hit Tab to cycle through all dependents

Note: when tracing precedents and dependents Excel will only highlight and cycle through cells on the active worksheet

Cell B5 is the dependent of B2, B3, and B4

Grouping Rows and Columns

Grouping rows and columns is a superior alternative to hiding rows and columns

It makes visible the fact that rows and columns are indeed hidden

Highlight rows or columns that need hidden Alt + Shift + left/right arrows will group and ungroup rows Alt + Shift + up/down arrows will group and ungroup columns

Grouping Rows and Columns Cont.


To hide grouped data

Select a cell in the range to be hidden and hit Alt + D + G + H Select the first cell in the range that is hidden and hit Alt + D + G + S

To unhide grouped data

In this example, highlight cell C11 to ungroup

Notice in the example that column A and rows 5-10 are now hidden

Sorting Data

Groups of data can be sorted by category headings

Text or numerical data can be sorted in either an ascending or descending order

Select the data range to be sorted Alt + Data + S

Select how you would like your data organized

Note If the data range you selected includes the header row (the column headings in this example) be sure to relay that to Excel by checking the Header Row option under My data range has

PivotTables

A PivotTable report is an interactive table that quickly combines and compares large amounts of data What it does:

Rotates rows and columns to see different summaries of the source data Displays the details for areas of interest

When to use it:

To analyze related totals, especially if there is a long list of figures to sum To compare several facts about each figure

PivotTables Cont.

How to use it:


Select your data and hit Alt + D + P Select PivotChart report (Alt + r) and hit Finish (Alt + F)

By choosing a PivotChart report instead of just a PivotTable Excel will not only create the PivotTable, Excel will also add a chart and sheet to your workbook to better display all your data

PivotTables Cont.

Choose your layout by deciding where to place each data range Drag and drop the data boxes into the proper fields on the chart

The Data rectangle is for quantitative data that should be summed The Column and Row rectangles are used to organize qualitative data

PivotTable Example

NewCo has 4 divisions (1,2,3,4) and up to 4 products per division (A,B,C,D) A PivotTable can show the revenues for NewCo broken down by any division (or combination of divisions) and any product (or combination of products)

PivotTable Example Cont.

Notice the table is dynamic: By using the drop down arrows the table will instantly update to display revenues for the any combination of division and product

Data Table for Sensitivity Analysis


Creating a data table is simple with Excels Data Table feature It is especially useful for creating a sensitivity analysis Example:

In this example, we will be creating a sensitivity table to test how different growth rates and interest rates effect the value of a growing perpetuity. First solve for the value of perpetuity by dividing the cash flow by the difference between the interest rate and growth rate.

Formatting the Data Table

Follow the format seen right

Your calculated value MUST be linked to the top left-most corner of the table

In this table, the formula in cell B9 is =B6

Note that the 12% and 4% in the headings of this table MUST be hardwired (input) values for the table to work

If you reference other cells for those values (such as B4 and B5), the data table will not work correctly. In effect, you created a circular reference that Excel cannot solve. The growth rate (4%) and interest rate (12%) used to calculate the original value of perpetuity should be the middle numbers in the table setup

The other percents (5%, 3%, 10%, 14%) may be hardwired or calculated

Use the formula =D9+.02 in cell E9 to get 14%

Using Data Table

Highlight the area of your table as seen on the right

Be sure to include the row and column that contain your inputs
The center value of the table should always match the original value

Alt + D + T

The intersection of this point is the original data (in this example 12,500 is found by using the rates 4% and 12%) It is a good idea to implement a check Take the absolute value of the difference between the middle value of the table and the original value Example: =abs(D11-B6)

Tip You may wish to custom format the 12,500 to display text such as valuation

Data Table Options

Data tables take time to calculate because Excel is creating and running the model several times behind the scenes to create the data table

If your model has several tables, it is a good idea to operate with calculation set to Automatic except tables until the model is finished (Alt + T + O) Creating a check serves as a reminder to recalculate before printing (F9) Setting calculation to automatic except tables (not manual) is still an acceptable modeling practice as long as you have created the check

A model that needs to run manual calculations is usually a flawed model

Data Validation

Data Validation places constraints on the types of data that can be entered into a cell Data can be constrained to ranges of values with the following characteristics:

Whole numbers Decimals Dates # of text characters allowed

Alt + D + L

Data Validation Cont.

One of the most common applications of Data Validation is inserting a list box into a cell Select the desired cell and hit Alt + D + L Choose List from the Allow box and type the desired items of the list in the Source box, each separated by a comma

Alternatively, you can also use inputs from the model in the Source box by entering the cell reference

In this example: only values 1,2, or 3 may be entered into the cell

Split Window

Splitting the screen allows you to see different areas of the same worksheet To bisect the screen:

Place the cursor in the leftmost cell of the row where you want to split the screen Alt + W + S to split the screen Alt + W + S again to close split screen mode

To easily toggle between panes, even when editing a formula, use F6

Freeze Pane

Freezing the window pane prohibits scrolling This tool is sometimes used to freeze column headers so that as you scroll through a long list of data, you can still see the headings Alt + W + F

The active cell designates where the window will freeze To freeze a row of headings, make the active cell column A of the row just below the heading
Because A2 was selected before freezing, row 1 is frozen Even as you scroll down the spreadsheet, these headings are still visible, notice that the data has been scrolled to row 16

Arrange Windows

Arranging the windows is a quick and easy way to see all open workbooks Different options for arranging windows include cascading, tiling, or vertically/horizontally aligning open windows You can also choose whether you want all open workbooks arranged or only the windows of the active workbook Alt + W + A

Working with Excel Functions

Function Wizard

Excels function wizard allows you to search for a function and then receive an explanation of how to use that function

Alt + I + F

Type a brief description of the task in mind in the Search for a function box You may also select a category and browse the functions listed After selecting a function, the wizard explicitly describes each piece of the argument

This is a link to Excel Help which will provide greater detail and explanation of the function

Excel Functions Revisited


Recall that each equation must begin with = The function name must follow

Ex: =SUM Be sure that all parentheses are closed, this becomes especially important when writing complex formulas with multiple functions To use individual cells, separate the cell references with a comma

A set of parentheses must enclose the arguments

Syntax for selecting cells when writing formulas:


Example: =sum(A2,A3,A4) tells Excel to sum A2, A3, and A4 Example: =sum(A2:A4) tells Excel to sum all cells in column A rows 2 through 4

To select a contiguous region of cells, use a colon

To select both a region of cells and individual cells a combination of a colon and a comma can be used

Example: A2:C2,A6 tells Excel to sum all cells in row 2 columns A through C AND cell A6

Required/Optional Formula Components


Below is a formula which we will later visit; however, the principles remain constant for all functions When typing a formula into Excel, Excel displays the components of the formula

The piece of the formula that you are currently entering will be bolded

Ex: rate

The necessary punctuation will be displayed (commas, parentheses, colons, etc.) The pieces shown in [brackets] are optional

If values are not entered in their places, they will assume a default which can be found in the help menu Bracketed items offer additional properties/restrictions to the formula

If you move the cursor over the name of the function, you can link to the help menu to get specific detailed instructions on using the function

Function Wizard

Excels function wizard


allows you to search for a function and then receive an explanation of how to use that function Alt + I + F Type a brief description of the task in mind in the Search for a function box You may also select a category and browse the functions listed After selecting a function, the wizard explicitly describes each piece of the argument
This is a link to Excel Help which will provide greater detail and explanation of the function

Excel Functions Revisited


Recall that each equation must begin with = The function name must follow

Ex: =SUM Be sure that all parentheses are closed, this becomes especially important when writing complex formulas with multiple functions

A set of parentheses must enclose the arguments

Syntax for selecting cells when writing formulas:

To use individual cells, separate the cell references with a comma Example: =sum(A2,A3,A4) tells Excel to sum A2, A3, and A4 To select a contiguous region of cells, use a colon Example: =sum(A2:A4) tells Excel to sum all cells in column A rows 2 through 4 To select both a region of cells and individual cells a combination of a colon and a comma can be used

Required/Optional Formula Components

When typing a formula into Excel, Excel displays the components of the formula

The piece of the formula that you are currently entering will be bolded Ex: rate

The necessary punctuation will be displayed (commas, parentheses, colons, etc.) The pieces shown in [brackets] are optional If you move the cursor over the name of the function, you can link to the help menu to get specific detailed instructions on using the function

=AVERAGE(value:value)

Returns the average of a group of numbers Values can be either a range of numbers, individual numbers, or a combination of both

=COUNT(value:value)

Returns the number of cells in a range that contain numbers

It will not include text or blank cells in the count

=COUNTA(value:value)

Returns the number of cells in a range that contain numbers or text

It WILL include text but not blank cells in the count

=MAX(value,value)

Returns the largest value in a set of values

=MIN(value,value)

Returns the smallest value in a set of values

MIN and MAX (contd)

Using MIN

Using MAX
Use MAX to constrain a number above a certain level

Use MIN to restrict a value below a certain level

=SUM(value:value)

Returns the sum of a group of numbers

Using Sumbars

Sumbars ensure that an added row at the end of a sum range will be automatically picked up by the SUM function To use a Sumbar, include one extra blank row in your SUM range
Tip It is a good idea to display something in the blank cell, such as a single space formatted with a single accounting underline 3+4+1+3 does not equal 8! Notice how summing through an extra row picks up item d on the right.

=ROUND(number,number of digits)

Returns a number rounded to a specific number of places past the decimal

Rounding can be done to a number or a function shown in these examples

=ROUNDUP(number, num_digits)

ROUNDUP returns a number rounded UP to a specific number of places past the decimal

ROUNDDOWN returns a number rounded DOWN to a specific number of places past the decimal

Round column A values up to the nearest tenth.

Round column A values down to the nearest whole number.

=ABS(number)

Returns the absolute value of a number

=SQRT(number)

Returns the square root of a number

Logic Functions

Logic functions are used to test whether a value or set of values is =, >, or < another value or set of values (logical test) There are 3 main types of logic functions: AND, OR, and IF AND functions test whether all arguments are true OR functions test whether any arguments are true Both AND and OR functions return either TRUE or FALSE as the formula result IF functions also conduct a logical test, but they return a specified statement based on whether the test is true or false

AND vs. OR
AND

Syntax for AND

=AND(logical test 1, logical test 2, ) The formula will return TRUE only if all logical tests are true, otherwise it will return FALSE
=OR(logical test 1, logical test 2, ) The formula will return TRUE if any of the tests are true It will only return FALSE if all the logical tests are false
OR

Syntax for OR

=IF(logical test, value if true, value if false)


The value can be a number, cell reference, formula, or text

To make the value a formula, use normal formula syntax (without an additional =) To make the value text, set the text off with quotation marks

=NOT(logical)

Reverses the result of a logical test Use NOT when you want to make sure a value is not equal to one particular value The NOT function will become more valuable with more complex formulas

IS Functions

Used for testing the type of value or reference Checks the type of value and returns TRUE or FALSE depending on the outcome Syntax:
= ISBLANK(value) ISERR(value) ISERROR(value) ISLOGICAL(value) ISNA(value) ISNONTEXT(value) ISNUMBER(value) ISREF(value) ISTEXT(value) For example: ISERROR will test to see if a cell includes an error such as #N/A, #VALUE!, #REF!, #DIV/0!, #NUM!, #NAME?, or #NULL!

=COUNTIF(range,criteria)

Returns the amount of numbers in a given range that fit specific criteria If the criteria is either text or a logical test, it must be in quotes

=SUMIF(range,criteria)

Returns a sum of numbers in a given range that fit specific criteria

=SUMIF(criteria range, criteria, sum range)

The SUMIF function can also sum specific numbers based on criteria exhibited in a different column Syntax: For this example, Excel will sum the numbers in column C whose column B value is Product B (equivalent to B4)

Using Custom Number Formats

Custom Number Formats allow for formats outside of those bundled with Excel Alt + O + E, on the Number page, the last option under Category (Alt + C) The syntax is: POS;NEG;ZERO;TEXT Example: Yes/No Trigger

Syntax: Yes;ERROR;No;ERROR Returns Yes for any positive number, No for zero and ERROR for any negative number or text

Nesting Functions

Formulas can be combined for complex calculations Types of functions commonly nested:
Logic Ex: =IF(AND()) Error Ex: IF(ISERROR()) Formatting Ex: ROUND(MAX()) How it works: Excel will begin by evaluating the innermost function and then work out For example, in the above formatting example Excel will first evaluate the MAX function and then round that result

Logic

The AND function first checks to see if all the arguments are true. Then, the IF function returns yes if the AND function was fulfilled and No if it was not

Statistic

The SUM function first sums actual revenue and then subtracts the sum of projected revenue. The MAX function then compares this difference with 0 and returns which ever is greater.

=FIND(find_text,within_text,start_num)

FIND locates a desired text string within a main text string It returns the number of characters from the starting position of a desired string to the first character of the main text string Find_text: the text you want to find Within_text: the main text which contains the text you want to find

Result: 19

=MID(text,start_num,num_chars)

Returns a specific number of characters from a text string, starting at the position you specify, based on the number of characters you specify

Text: the text string containing the characters you want to extract Start_num: the position of the first character you want to extract in text

The first character in text has start_num 1, and so on

Num_chars: specifies the number of characters you want MID to return from text

Result from previous slide

=LEFT(text,num_chars)

Returns the first character or characters in a text string, based on the number of characters you specify. Text: the text string that contains the characters you want to extract

Num_chars: specifies the number of characters you want LEFT to extract

Num_chars must be greater than or equal to zero If num_chars is greater than the length of text, LEFT returns all of text If num_chars is omitted, it is assumed to be 1

Results from previous slides

=LEN(text)

Returns the number of characters in a text string

Text is the text whose length you want to find Spaces count as characters

Formatting Numeric Values as Text

Numeric values can be formatted as text using an apostrophe Text is left aligned by default Example: To format the value 2005 as text, simply enter: 2005

Notice the apostrophe is not displayed in the cell.

Notice that the leading apostrophe will not be displayed in the cell in front of 2005

Notice the trailing & is not displayed in the cell.

Formula results can be formatted as text using the character combination &

Converting Numeric Values using TEXT

The TEXT function has the ability to convert a numeric value into text The result from TEXT is no longer a numeric value but rather a string of text Syntax: =TEXT(value,number format) Example: TEXT(5, $0.00) results in the text $5.00

Mixing Text and Links via &


The Ampersand (&) gives the ability to mix text and links in formulas Syntax: Notice the = to indicate a formula

Text before Link: =Text&Link Text after Link: =Link&Text Link between Text: =Text&Link&Text The link can be either a cell reference or a formula containing

cell references Examples:


=The result is: &A1 =A1& is the result =I am shocked that &A1& is the result

Text and Location: Linked Footnote Markers

Linked footnote markers update when the footnote number changes Use the LEFT function Syntax: =LEFT(cell,num_chars) Returns the specified left most number of characters from a designated cell Notice how the Footnote marker in A3 automatically updates when the footnote is renumbered in A6

DATE Function

Returns the sequential serial number that represents a particular date. If the cell format was General before the function was entered, the result is formatted as a date. Syntax: =DATE(year,month,day)

Year: can be one to four digits. Month: number representing the month of the year Day: number representing the day of the month

=EOMONTH(start_date, months)

Returns the end-of-month date that is a specified number of months passed start_date Example: EOMONTH(DATE(2006,1,1),12) returns 39113

39113 is the serial date that represents 1/31/2007 when formatted as a Date

EOMONTH requires that the Analysis ToolPak be activated Tools -> Add-ins -> Select Analysis ToolPak

Best Modeling Practices

Model Layout

Avoid laying out model pages horizontally A vertical layout has two main advantages:

Never layout a model horizontally

The ability to use Pg. Up and Pg. Down Keeping column consistency among years

A horizontal layout hinders your ability to freely insert and delete rows

Modular Modeling

Involves splitting the portions of your model into pieces called modules Devote a worksheet to each financial statement Adds organization to the model Provides the ability to copy modules to other workbooks so that all work does not need to be created from scratch

Notice that each piece of the model is contained in its own worksheet

Column Alignment

It is always a good idea to keep columns aligned throughout the model For example, if Column E corresponds to 2008 on the Operating Assumptions, then Column E should correspond to 2008 on the Income Statement This makes it easier to trace your formulas and locate errors if, for example, you are referencing the wrong year in a formula

The inconsistency between the columns will make it hard to trace incorrect references

Avoiding Shortcut Formulas when Summing

When working with modular models, it is not a good idea to reference multiple worksheets in a summation A better approach is to bring all values you wish to reference to the current page before summing This adds clarity to your model

Dont do this!

This is the better approach!

Summing Across and Down


When summing across and down, make sure to recalculate vertical formulas (not just copy across horizontal formulas) This will help you catch errors

Example: Below, notice what happens if our LTM formula is simply copied down Column I. An error in one row would not affect the other rows and the model would seem to be correct.

There was an error calculating the LTM revenue (200) that does not effect the gross profit because the formula was copied across. 200 69.5 cannot be 36.1!

The better approach would have been to recalculate LTM gross profit by subtracting cost of sales from revenue. This would help you to catch an error such as this one.

Using Cumulative Checks - Example

Cumulative checks are used to obtain a grand check for an entire section of the model Example: Confirm that the Balance Sheet balances

You must ensure that Assets (A) = Liabilities (L) + Equity (E) Use =ABS((A-(L+E))) Add each years check to the following years check to arrive at a total cumulative check

Using the absolute value function will safeguard against canceling out a value in the check if there is an offsetting value in a future year

If the cumulative check is 0, then all checks must be 0, therefore the Balance Sheet is balanced

Building Checks Into a Model


Building a system of checks into your model will ensure that you dont have any glaring errors Typical things to check for:

Balance Sheet balances and does not contain any negative numbers where negative numbers do not make sense

For example, debt should never be negative, accumulated depreciation will be negative

Ensure that sources of funds always equal uses of funds Ensure that data tables are recalculated before printing

All checks from the model should be summarized in one place on the cover page

This makes it quick and easy to check the entire model You can use an if statement to change the title of your model to ERROR if any of your checks indicate a problem

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