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Spreadsheet Modelling

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misha bansal
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12 views

Spreadsheet Modelling

Uploaded by

misha bansal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
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F5 -> Special -> To find blank cells

Right click on header cell-> Format cell-> Wrap text to display full content of the
cell

CENTERING TEXT ACROSS A MULTI-CELL SELECTION


Cell C2, which helps to clarify questions (6)-(11), is long enough that it causes
its column to be considerably wider than the others. This could be remedied by
merging cells C2:H2. Merging cells can interfere with the ability to copy formulas
and complete certain other operations. Instead, we will center the text in cell C2
across the range C2:H2. Unlike a merge and center operation, this will allow Excel
to continue to treat cells D2:H2 as individual cells.

CTLR + ~ => Toggle between formulas and their value in the cell

LEFT= used to read value as an offset


FIND= to find a given char occurrence

Flash Fill is not foolproof; sometimes it just does not get the pattern.
If your original data column has a heading you need to enter a heading in the same
row of the column in which you want Flash Fill to enter data.

There is an easy way to display the current date or current date and time in a
cell. Entering the function =TODAY() (maybe this used to be Katie Couric's favorite
function!) in a cell enters the current date, while entering the formula =NOW()
displays the current date and time in a cell. Observe in cell B3 that entering
=TODAY() ensures that the current data is always displayed in cell B3, while
entering =NOW() in B5 ensures that the current date and time are entered in cell
B5.

TODAY()= Todays date

NOW()= Todays date and current time

DATE()= Given year month date, we can generate date.

SUMIF() = Sum for a given condition

SUMIFS() = Sum for more than one conditions

If there is one thing we know about this world, it is that we do not know what is
going to happen. For example, Le Napoleon does not know how many Sacher Tortes will
be demanded each day. Excel contains several functions that help us model uncertain
events such as the daily demand for Sacher Tortes. In this section, we will discuss
two such functions: RAND() and RANDBETWEEN. In a future chapter, we will study in
more detail how to use an Excel add-in, @RISK, to model uncertainty.

Another useful Excel function for modeling uncertainty is the RANDBETWEEN function.
IF a and b are integers and you enter =RANDBETWEEN(a,b) in a cell, then Excel is
equally likely to return any integer between a and b inclusive.

For example, suppose Le Napoleon believes that it is equally likely that today they
will sell between 100 and 200 Napoleons. Then entering =RANDBETWEEN(100,200) in any
cell will generate a random demand that reflects our view of what might happen.

OTHER USEFUL FINANCIAL FUNCTIONS


PV function: computes the value of an annuity.
FV function: computes the future accumulation when a constant sum of money is
deposited each period.
RATE function: computes the effective rate given number of payments, size of each
payment, and amount borrowed.
NPER function: computes the number of periods required to pay back a loan given the
rate, size of payments, and amount borrowed.
IPMT, PPMT, CUMPRINC and CUMIPMT: these functions help us calculate an amortization
schedule which determines the breakdown each period between principal and interest.

COUNT(cell range) counts how many cells in cell range containing numbers.
COUNTA(cell range) counts how many cells in cell range are not blank (contain text
or numbers).
COUNTBLANK(cell range) counts how many cells in cell range are blank.

Excel has many useful functions that can be used to do basic statistical
calculations. A brief description of many of these functions follows:

MAX(cell range) returns the largest number in a cell range.


MIN(cell range) computes the smallest number in a cell range.
LARGE(cell range, k) returns the kth largest number in a cell range.
SMALL(cell range,k) returns the kth smallest number in a cell range.
AVERAGE(cell range) computes the average of all numbers in a cell range.
RANK(k, cell range,0) returns the rank of a number k in a cell range, with the
largest number obtaining a rank of 1, the 2nd largest number a rank of 2, etc.
RANK(k, cell range,1) returns the rank of a number k in a cell range, with the
smallest number obtaining a rank of 1, the 2nd smallest number a rank of 2, etc.
The formula VAR(cell range) computes the variance of the numbers in a cell range.
The formula STDEV(cell range) computes the standard deviation of the numbers in a
cell range

Prescriptive and descriptive models:A model that prescribes a course of action is a


prescriptive model. For example, a model that recommends a price for pastries would
be a prescriptive model. A spreadsheet that develops a cash budget which is used to
predict Le Napoleon's cash needs over the next year would be a descriptive model.

A model in which all inputs and outputs are known with certainty is known as a
deterministic model. For example, if we assume we know the unit cost of producing a
Napoleon and know with certainty for any price the demand for Napoleons, it is a
simple matter to develop a deterministic model that can be used to find the profit
maximizing price for Napoleons. Of course, there is no way we can know with
certainty the demand for Napoleons. Therefore, we could choose to model the demand
for Napoleons as an uncertain quantity. This would result in a stochastic model. We
will learn about stochastic models in Unit 11 when we discuss Monte Carlo
Simulation.

The following steps will often help us build a model:

STEP 1: What do we want to use the model to accomplish?


STEP 2: To accomplish our goal, what output quantities must be computed?
STEP 3: What inputs and decision variables need to be determined in order to
compute the needed outputs?
STEP 4: Identify the key logical relationships between our inputs, decision
variables, and outputs. In essence, this requires us to determine the calculations
or formulas that enable the model user to turn the inputs and decision variables
into output values.
STEP 5: Set up a spreadsheet that uses the logical relationships to relate inputs,
decision variables, and outputs.
STEP 6: If the model is prescriptive, use the model to make the key decisions.
STEP 7: Identify the model's limitations. For example, are there any key factors
that our model does not consider?
We will soon use this model-building framework to help determine if Le Napoleon
should open up a new bakery. Before developing the model, let's look at some
guidelines that can help you develop "intelligent" models.

A spreadsheet model is easier to follow if we use different colors to denote each


type of building block. We will use the following color-coding convention:

Yellow for Inputs


Blue for Decision Variables
Orange for Calculations
Gray for Outputs

Function Key 3- name paste button

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