Welcome to 2 days Workshop on Financial Modeling by using Spreadsheets

Shivaraj Bhor BE, PG (NITIE), CWA Deputy Manager (Mgmt Acct Cell) GAIL (India) Limited
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Objective of the Workshop

Enabling Business Managers: Actively learn : To Design, Develop / Implement spreadsheet real-world models Put theory into Practice: By understanding Model Formulation Increase Analytical Skills: Mathematical techniques By Exploiting

Exploring Office 2003 - Grauer and Barber

Introduction to Excel
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Spreadsheet
Spreadsheet is the PC application that is used most frequently by managers and executives. It is the computerized equivalent of an accountant's ledger. Enables us to organize data in a readily understandable format.

Exploring Office 2003 - Grauer and Barber

Introduction to Spreadsheets
Workbook contains one or more worksheets Spreadsheet a computerized ledger Rows and Columns Columns identified with alphabetic headings Rows identified with numeric headings Intersection of row and column forms a cell.

Exploring Office 2003 - Grauer and Barber

Definitions
General format it is the default format for numeric entries and displays a number according to the way it was originally entered. Number format displays a number with or without the 1000 separator and with any number of decimal places. Negative numbers can be displayed with parentheses and/ or can be shown in red. Scientific format which displays a number as a decimal fraction followed by a whole number exponent of 10; for example the number 12345 would appear as 1.2345E+04. The exponent, +04 in the example, is the number of places the decimal point is moved to the left. Very small numbers have negative exponents.
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An Excel Workbook
Menu bar gives lists of commands

Formatting toolbar

Standard toolbar

Title bar shows name of workbook

Exploring Office 2003 - Grauer and Barber

Rows, Columns, and Cells

Cell referenced by column, then number

Active cell surrounded by heavy border

Row headings to the left of each row. Rows designated with numbers

Column headings above each column. Columns designated with letters

Exploring Office 2003 - Grauer and Barber

Types of Cell Entries Constants & Functions

Constant an entry that does not change
Can be a numeric value or descriptive text
Student Adam 100

Functions a predefined computational task

Users cannot change them

=AVERAGE(B3:B7) =SUM(A1:B2)

Exploring Office 2003 - Grauer and Barber

Formulas and Constants

Formulas and Constants

Constant is entries that does not change. It may be a number, such as a grade on an exam, or it may be descriptive text (name). Formula is combination of numeric constants, cell references, arithmetic operators, and/or functions. Always begins with an equal sign =(B3+B4+B5/5) =AVERAGE(B3:B7)

Exploring Office 2003 - Grauer and Barber

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Toolbars
Appear beneath the menu bar Contain buttons that perform commonly-used commands Standard toolbar buttons correspond to most basic commands in Excel Examples include opening, closing, and saving a workbook Formatting toolbar buttons correspond to common formatting operations Examples include boldface and cell alignment

Exploring Office 2003 - Grauer and Barber

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Worksheet Basics
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Worksheets
Excels main screen is called a worksheet. Each worksheet is comprised of many boxes, called cells.

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Organize Information
You can organize information by typing a single piece of data into each cell.

How to Enter Information

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Selecting a Cell
Select a cell by clicking on it once (dont double click). You can move from cell to cell with the arrow keys or by pressing the Enter key.

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Entering Information / The Formula Bar

To enter information in a cell, just start typing. When you are done either
Press the Enter Key Press an arrow key Click on the check button (only visible when entering data into a cell)

The information in the selected cell is also displayed in the formula bar above the worksheet.

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Double Click to Modify a Cell

To modify the contents of a cell double click on the cell. Then use the right, left arrow keys and the Insert and Delete keys to modify the data. When you are done:
Press the Enter key or Click on the check box.

Double click to change hi there to hello there

Names of Rows, Columns and Cells

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Column Names (letters) & Row Names

(numbers)

The columns of the worksheet are named with letters The rows are named with numbers

Selected Cell

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Cell Names (ex. B4)

The name of a cell is a combination of the Letter Of The Column that the cell is in followed by the Number Of The Row that the cell is in. Example: the selected cell in the picture is named B4 (NOT 4B) Excel automatically shows the the name of the currently selected cell in the name box (located above the worksheet). The letter must come first (i.e. B4, NOT 4B) and there may NOT be any spaces between the letter and the number. We will learn later why it is important to understand how to name cells.

Name Box

Selected Cell

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Information that is too wide for a cell

The word Name is in cell A5 The words Hours Worked are in cell B5 (NOT in cell C5). However, since the information is too wide for cell B5, it looks like it extends into cell C5. You can determine that the information is really only IN cell B5 by selecting cell B5 and looking at the formula bar and then selecting cell C5 and looking at the formula bar.

Hours Worked is in cell B5 (look at formula bar)

Hours Worked is NOT in cell C5 (formula bar is empty)

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Information that is Chopped Off

If there is information in the cell to the right, then the original cell still contains all of the data, but the data appears to be chopped off. You can see the complete data by selecting the cell and looking in the formula bar.

Change the Width of a Column or the Height of a Row

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Make a column wider Drag column

To make Column B wider, point the cursor to the column separator between columns B and column C. The cursor changes to a Double headed arrow. Now, click the left mouse button and without letting go of the button, drag the separator to the right to make the column wider (or to the left to make the
column narrower).

separator to the right

Column is now wider

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Getting the Exact Width

To get the exact width, double click on the separator instead of dragging it.
Double click here

Column is now EXACTLY the correct width

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Resizing a Row
Make a row taller or shorter by dragging the separator between the rows.
Row is now taller

Click and drag here to resize row 5.

Putting an Enter inside a cell

To add a new line inside a cell Double click inside the cell where you want the new line. Press Ctrl-Enter (i.e. hold down the Alt key and press Enter while still holding down Ctrl). When you are done editing, press Enter (without holding down Alt) to accept the changes.
Step 1: Originally Hours Worked is on one line.

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Step 2: Double click to edit cell and then press Alt-Enter

Step 3: Press Enter (without Alt) to accept the changes.

Basic Formatting (e.g. bold, colors, fonts, etc)

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Formatting Cells
Select one or more cells and then click on any of the formatting buttons (see below) to change the formatting of the selected cells. Formatting buttons: show fewer decimal points (ex.
10.507 is displayed as 10.51)

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These change the way numbers are displayed in cells. (these dont affect words).

show more decimal points (ex. 10.507 is displayed as 10.5070) indent within cell put border around cell(s) color of cell color of text in cell

center font name font size left justify right justify

bold italics
click on downward pointing arrows for other font names and sizes

center & merge cells (will explain later)

remove indent
show with commas (e.g. 12345 becomes 12,345) click on downward pointing arrows for other colors and border styles

underline

show as percent (ex. 0.5 becomes 50%) show as currency (ex. 1000.507 becomes $1000.50)

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Example unformatted worksheet

Unformatted worksheet see next slide for formatting.

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Example making cells bold

Click on cell A1 and drag to cell A3. Then press the Bold button to make cells A1,A2,A3 bold. You could also press the font or background color buttons to change the color or apply any other formatting you like (this is not shown below).

Other Ways of Selecting More Than One Cell

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To select a large range of cells, click on the upper left cell in the range. Then hold the shift key and click on the lower right cell in the range. You can select different non-contiguous areas of cells by holding down the Ctrl key while clicking and dragging.

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Selecting Non-Contiguous Ranges

Click and drag to select the first range. Ctrl-click and drag to select additiona l ranges

(This cell is also selected even though it appears white).

Selecting entire Rows, entire Columns or all cells on the worksheet.

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To select an entire column, click on the letter for the column header. To select several columns, click on the header for the first column and drag to the right. To select an entire row, click on the number for the row header. To select several rows, click on the header for the first row and drag down. To select all of the cells on the spreadsheet, click on the upper left hand corner of the spreadsheet (where the column headers meet the row headers)

Select Entire Columns/Rows/Worksheet

To select ENTIRE COLUMN B
click on B column header

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To select ENTIRE ROW 2

click on 2 row header

Click

Click

To select ROWS 2,3 and 5,6,7

To select COLUMNS B,C,D

click on B column header and drag to right

click on 2 row header, drag down, then Ctrl-Click on 5 row header and drag down

Click

drag

Click and drag down then Ctrl-Click and drag down

To select COLUMNS B,C and F,G,H

Click click on B column header, drag to right, then Ctrl-Click on F column header and drag right CtrlClick

To select ENTIRE WORKSHEET

click on select worksheet button (in corner between 1 and A buttons)

drag

drag

Click

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Example - continued
Step 1: Click on row header for row 5 Step 2: Ctrl-click on row-header for row 11 Step 3: Press Bold button or type ctrl-b Note: After being bolded, the word Employee is now too wide for the column, so make the column wider if necessary (this step is not shown).

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Format Cells
Using the formatting buttons only give you a limited amount of formatting ability. For more formatting ability, select one or more cells and right click on the selection. Then choose format cells from the popup menu. Choose options from the Number, Alignment, Font, Border and Patterns tabs and press OK to change the way your information looks on the screen. The Protection tab is used to lock cells so that their contents cant be modified. We will not go into the details of using the format cells dialog box at this time but you should be able to figure out most of it by yourself.

Formatting changes how things LOOK, not how they WORK.

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When you change the format of a cell, Excel still remembers the original value. Excel will use the un-formatted value when calculating formula values. Example: if you change numbers to appear with fewer decimal points the original number with all of its decimal points are used in calculations.

Formulas

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Excel Formulas
You must have an equals sign ( = ) as the first character in a cell that contains a formula. The = sign tells excel that the contents of the cell is a formula Without the = sign, the formula will not calculate anything. It will simply display the text of the formula.

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Formulas - correct
formula with = sign After pressing ENTER

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Missing = sign
Missing = sign! Before pressing enter After pressing ENTER (no change - not a function)

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Types of operations
You can use any of the following operations in a formula: operation symbol example
addition: + subtraction: multiplication: * division: / exponentiation ^ negation (same symbol as subraction) =a1+3 =100-b3 =a1*b1 =d1/100 =a2^2 =-a2+3

Explicit (literal) values and cell references

You can use both explicit values and cell references in a formula An explicit value is also called a literal value
Formula with only cell references:
Formula with only literal values: =100/27

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=a1*b1

Formula with both cell references and literal values:

=a1/100

Errors in Formulas

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Common Errors
The following are some errors that may appear in a spreadsheet (there are others too).
#######
Cell is too narrow to display the results of the formula. To fix this simply make the column wider and the real value will be displayed instead of the ###### signs. Note that even when the ###### signs are being displayed, Excel still uses the real value to calculate formulas that reference this cell.

#NAME?
You used a cell reference in the formula that is not formed correctly (e.g. =BB+10 instead of =B3+10)

#VALUE!
Usually the result of trying to do math with a textual value. Example: =A1*3 where A1 contains the word hello

#DIV/0!
Trying to divide by zero. Example: =3/A1 where A1 contains 0 (zero)

Circular Reference
Using a formula that contains a reference to the cell that the formula lives in. Example: putting the formula =A1+1 in cell A1 or putting the formula =SUM(A1:B2) in any of the cells A1, B1, A2, B2

Order of Operations

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Complex formulas
You can use several operations in one function You can group those operations with parentheses Examples
=3*2+1 =c1*(a1+b1) =(100*a2-10)+(200*b3-20)+30 =(3+2*(50/b3+3)/7)*(3+b7)

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Order of operations
When using several operations in one formula, Excel follows the order of operations for math.
first: second: third: Do all parentheses - innermost first exponents (^) all multiplication (*) and division (/). these starting with the leftmost * or / and work to the right. all addition (+) and subtraction (-). Do these starting with the leftmost + or and work to the right.

fourth:

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Order of operations
The value of 3+2*5

is
13 NOT 25!

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Order of operations
3 + (100 - 20) / 10 - 6 * 2 / 4 + 9 3 + 80 / 10 - 6 * 2 / 4 + 9 3+ 8 - 6 * 2 / 4 + 9 3 + 8 - 12 / 4 + 9 3+8 - 3 + 9 11 - 3 + 9 8+9

answer:

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Functions

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What is a function?
A function is a "named operation" Functions have
a name parentheses parameters/arguments inside the parentheses
The words parameter and argument mean the same thing you can have many parameters for one function separated with commas (,) The number of parameters is one more than the number of commas.

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The SUM function

Examples Function
=SUM(1,2,3,4,5) =SUM(a1,b1,c1) 15 a1+b1+c1

Result

=SUM(9,a1,b2,5,c1)

9+a1+b2+5+c1

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Terminology
SUM(1,2,3,4,5)
The name of the function is "SUM" The parameters or arguments to this function are 1,2,3,4 and 5

The entire thing, i.e. SUM(1,2,3,4,5), is a function call The value of this function call is 15. Another way to say this is that this function call returns 15.

Ranges (e.g. a1:c3)

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Ranges
A rectangular box of cells is called a range. The name of a range is
the name of the upper left cell of the range Followed by a colon : Followed by the lower right cell of the range

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Example: A1:B2 is shorthand for A1,A2,B1,B2

See next slide for more examples

A1:B2

Examples of Range Names

Examples
C3:E10

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B2:B5

B3:E3

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Using a range as a parameter

Ranges can be specified as a parameters to a function call. Both of the following function calls produce the same result as =a1+b1+c1+a2+b2+c2+a3+b3+c3+a4+b4+c4 however the 2nd version uses a range and is much shorter. without a range =SUM(a1,b1,c1,a2,b2,c2,a3,b3,c3,a4,b4,c4) with a range =SUM(a1:c4)

Function calls with multiple parameters

You can include multiple ranges and cells as parameters

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Example: the following function call has 3 parameters. There are two ranges (a1:b2 and c4:c7), one number (100) and one cell reference (d3) =SUM(a1:b2,100,c4:c7,d3) Is the same as:

=SUM(a1,a2,b1,b2,100,c4,c5,c6,c7,d3)

Other Functions

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Other functions
Click the function button to see the available functions:
Function buton brings up the function dialog box (see next slide)

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Example
AVERAGE
formula that contains a function
=AVERAGE(2,4,10,4) =AVERAGE(a1,f32) =AVERAGE(a1:c1) =AVERAGE(a1:c1,10) 5 (a1+f32) / 2 (a1+b1+c1) / 3 (a1+b1+c1+10) / 4

value

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Combining Functions and other values in a single formula

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Functions and other values

You can combine functions, cell references and literal values to make a complex Excel formula Examples
=3 + b23 * SUM(d20:g20) =SUM(a1,100) * AVERAGE(d10:j10) =100 / ( AVERAGE(b2,c2,d30) + AVERAGE(f1:f20) )

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Other Types of Cell References

References to entire ROWs References to entire COLUMNs References to cells or ranges on other worksheets (i.e. tabs)

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Entire Rows (e.g. 2:2 or 2:4)

A cell reference of the form <rowName>:<rowName> refers to the range of all the cells for those rows. Example:
The reference, 2:2, refers to all of the cells on the 2nd row. The following formula adds up all of the values on the 2nd and 4th rows of the spreadsheet: =sum(2:2,4:4)

Another Example:
The reference, 2:4, refers to all of the cells on the 2nd , 3rd and 4th rows,. The following formula adds up all of the values on the 2nd, 3rd, 4th , 10th, 11th , 12th, 13th, 14th and 15th rows of the spreadsheet:

=sum(2:4,10:15)

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Entire Columns (e.g. B:B or B:D)

A cell reference of the form <colName>:<colName> refers to the range of all the cells for those columns. Example:
The reference, B:B, refers to all of the cells in the 2nd column. The following formula adds up all of the values in the 2nd and 4th columns of the spreadsheet: =sum(B:B,D:D)

Another Example:
The reference, B:D, refers to all of the cells in the 2nd, 3rd and 4th columns. The following formula adds up all of the values in the 2nd, 3rd, 4th, 6th and 7th columns of the spreadsheet:

=sum(B:D,F:G)

References to cells on other worksheets

Cell on another sheet: sheetName!cellReference Range on another sheet: sheetName!range Row on another sheet: sheetName!row:row Column on another sheet: sheetName!column:column

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If a sheet name has a space in it, you must surround the sheet name with apostrophes (i.e. single quotes)

Examples
sheet2!a1 sheet2!b4:c8 '2002 Forecasts'!f3:f10 =sum('2002 Forecasts'!f3:f10) =sum('2202 Forecasts'!f:f)

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More examples
Add up values from 2 different sheets =sum ( 'great stocks'!b2:c4, 'so so stocks'!b2:c4) This next one is a little confusing =sum (a1,a!a1,b1:b4,b1!b4,c!c:c)
Explanation
a1 a!a1 b1:b4 b1!b4 sheet c!c:c column this is a cell reference on the current sheet "a" is the name of sheet. "a1" is a cell on the "a" sheet this is a range on the current sheet "b1" is the name of a sheet. "b4" is a cell on the "b1" c" is the name of a sheet. c:c" is all of the cells in the c on the c sheet

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Absolute and Relative Cell References

Absolute and Relative Cell References

By default, when you copy a formula that contains a cell reference, excel will automatically adjust the cell reference.

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You can stop Excel from automatically adjusting the cell reference by using one or more dollar signs ($) in the cell reference. These are called absolute cell references.
A cell reference without a dollar sign is a relative cell reference.

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Examples
The following all refer to the same cell
d9 $d$9 $d9 d$9

The only difference between these cell references relates to what happens when you copy a formula that contains the cell reference.

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Relative Cell Reference

d9 This is a "relative cell reference". Changing the column: If I copy this cell reference to another cell: the "d" will increment one letter for every cell that I move over to the right. The "d" will decrement one letter for every cell that I move over to the left Changing the row: If I copy this cell reference to another cell: the "9" will increment by one for every cell that I move down. The "9" will decrement by one for every cell that I move up

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Absolute cell reference

$d$9 This is an absolute cell reference.
If I copy a formula with this cell reference, the cell reference will NOT change AT ALL.

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Mixed References
$d9
and

d$9

These are "Mixed" cell

references:

$d9
The "d" will stay the same when you copy the cell, but the "9" will change.

d$9
The "d" will change when you copy the cell, but the "9" will stay the same.

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Data Types

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Data Types
Numeric values: operators: sample functions:

any number + * / sum( ), average( ), max( ), min( ) etc.

Text (AKA Character or String) values: Any group of letters or numbers or special characters. Prefix value in cell with an apostrophe ( ' ) to force a text value operators: & (concatenation) sample functions: right( ), left(), mid(), lower(), upper(), len(), etc Dates values: operators: sample functions: Logical (AKA boolean) values: Operators: sample functions:

dates and times N/A now( ), today( ), hour(), minute(), etc.

true false < > = <> if( ), and( ), or( ), not( ), isblank()

<=

>=

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Data Types for Values in Cells

By default:
a cell that contains a number is treated as numeric data a cell that contains a date is treated as date data (we'll see more about this later) a cell that contains data which is not numeric and not a date is treated as "text"

Text Data

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Text / String / Character

The following three terms all used to refer to "text" data. All three terms mean the same thing.
text data string data character data

This presentation will generally use the term "text data" but you should be familiar with the terms "string data" and "character data"

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Text data
Text data is used to store general purpose text (e.g. names, places, descriptions, etc) You can't do "math" with text values (obviously)

Text isn't part of numerical calculations (obviously)

Formula to add up all numbers in column C

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formula view (press Cntrl-`)

(Same Spreadsheet)

values view (press Cntrl-`)

Text data in C1 is not included in the Sum

Text Functions

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Text Functions
Many functions are used to manipulate text values. The following are only some of them
right( ) left( ) mid( ) concatenate( ) lower( ) upper( ) len( )

RIGHT, LEFT and MID functions

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RIGHT function
The RIGHT function is used to isolate a specific number of characters from the right hand side of a text value. (example on next slide)

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RIGHT ( <text>, <numCharacters>)

Formula View

Values View

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RIGHT numCharacters is optional

The <numCharacters> parameter in the RIGHT function is optional. If you dont specify it the default is 1 (one).
Formula View

Values View

These produce the same results.

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LEFT
The LEFT function is the same as the RIGHT function, but it returns characters from the LEFT side of the value.

MID ( <text>, <startPosition> , <numCharacters>)

MID is used to get values from the middle of some text. MID takes 3 parameters:

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The original text The position to start taking the new value from The number of characters to take for the new value

Example on next slide

Example: MID ( <text>, <startPosition> , <numCharacters>) This example extracts the second through the fourth characters from the original text value:
Formula View

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Values View

Concatenation ( & ) and CONCATENATE function

95

96

Concatenation (&)
Use & to combine (or concatenate) two different text values

Formula View

Values View
Notice that there is no space between the two values

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Concatenate many values

You may concatenate many values together
Formula View

Values View

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Concatenation with "literal" values

You can also concatenate "literal" values. You must include the literal values inside quotes For example to display spaces in the "full name" in the previous example you could use the following formula. Each space that you want to display must be included in quotes. =A2&" "&B2&" "&C2 (Don't forget any of the &'s )

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Concatenating spaces - Example

You can concatenate spaces into a formula
Formula View

Values View

values contain spaces

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LEFT( ) with & in same formula

You can combine the results of different function calls with concatenation.
Formula View

Values View

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Putting it all together

In this example we concatenate periods into the initials.
Formula View

Values View

The initials now contain periods

Separate first name & Last Name - Use of Search & Left function
Formula View

102

Values View

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CONCATENATE Function
You can use the CONCATENATE function instead of the ampersand (&). The following formulas are equivalent:

=A1&B1&C1
=CONCATENATE(A1,B1,C1) The CONCATENATE function can take as many parameters as you like.

More Text Functions: PROPER LOWER UPPER LEN

104

LOWER ( <textValue> ) UPPER ( <textValue> )

LOWER converts text to lower case. UPPER converts text to upper case. PROPER Coverts first letter in upper Case Example:

105

Formula View

Values View

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LEN ( <textValue> )
LEN returns a numeric value equal to the number of character in a text value (i.e. the length of the text value). Spaces ARE included in the length. Example
Formula View

Values View

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TRIM ( <textValue> )

Formula View

Values View

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REPT ( |,Cell Ref )

Formula View

Values View

Dates and Times

109

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How Excel Stores Dates

Dates are stored in Excel as the number of days since Dec 31, 1899 for that date. (ex. Jan 1, 1900 is stored as the number 1). To see this, type a date in a cell and then press Ctrl-` to see the formulas view. Example
Values View
Dates become numbers in formulas view

Formulas View

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Times and Dates in the same Cell

A cell can contain both a date and a time.

The value of both the date and the time is stored internally as a single decimal number.
The whole number portion represents the DATE and is the number of days since Dec. 31, 1899

The decimal part represents the TIME and is the fraction of the day that has elapsed.
Examples:
Jan 1, 1900 at 12AM is 1.0 (i.e. 1 day since Dec 31, 1899 and 0 percent of the day elapsed so far) Jan 1, 1900 at 12PM is 1.5 (i.e. 0.5 of the day elapsed) Jan 2, 1900 at 12PM is 2.5 (i.e. 2 days since Dec. 31, 1899) Feb 1, 1900 at 1:05 PM is 32.5451388888889 (i.e. 32 days since Dec 31, 1899 and 0.5451388888889 of the day elapsed by 1:05 PM. This makes sense as it is a little past noon so a little more than half of the day elapsed.

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Times and Dates - Example

Values View

Formulas View

113

Date Arithmetic
You can do arithmetic with dates. Add and subtract days by adding and subtracting whole numbers. Add and subtract times by adding and subtracting fractional values.

Examples
=A1+7 =A1-5*7 =A1- (1/24) =A1+ (3/24) =A1+2.5 =A1-A2+1

(one week after the date in A1) (5 weeks before the date in A1) (one hour before the time specified in A1) (three hours after the time specified in A1) (two and a half days after the time specified in A1) (the # of days between the date in A1 and the date in A2)

Formatting cells with Dates and Times

Right click on the cell and choose Format Cells From the Category list in the Number tab either
Choose Date, Time or Custom and choose an appropriate looking format OR

114

If you choose General or Number, the internal number for the Date/Time will be displayed in the spreadsheet even in the values view.

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Date & Time Functions

Current Date - TODAY( ) Current Time Now ( ) Year ( ) Month ( ) Day ( )

116

Date & Time Functions

Add months to start dates by : EDATE (start date, months) Extract age of person by DATEDIF (Start date, end date, format)
Format :
Y for difference in years M for difference in months D for difference in Days YM for difference in Months ignoring years YD for difference in Days ignoring years MD for difference in Days ignoring Month & years

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Date & Time Functions

Formula View

Values View

Logical values

118

119

Logical operators
In Excel the following "operators" are used
Operator > < >= <= = <> Meaning greater than less than greater than or equal to less than or equal to equal to not equal to
true false

Examples
3>2 3<2

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Logical Formulas
Formula View Values View

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Same formulas, different values

Formula View Values View

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IF function
Formula View Values View

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IF with a numerical result

Formula View Values View

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AND OR NOT

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AND
The following is TRUE Fish live in water AND deer live on land.

The following are all FALSE

Fish live in water AND deer live in water. Fish live on land AND deer live on land. Fish live on land AND deer live in water.

126

AND function

127

AND
Formula View Values View

128

IF with AND - nested function calls

You can use an AND inside of an IF. This is called a NESTED FUNCTION CALL Example =IF( AND (A2>A3,B2<>B3) , 500, 1000)
AND is "nested" inside of the IF

These parentheses "belong to" the if

129

IF with AND - parameters

Parameters for IF function:

130

IF with AND - spreadsheet views

Formula View Values View

131

AND function
Takes any number of parameters Returns TRUE if ALL of the parameters evaluate to TRUE otherwise returns FALSE.

132

OR and NOT functions

133

OR
Takes any number of parameters Returns TRUE if ANY of the parameters evaluate to TRUE otherwise returns FALSE

134

NOT
Takes ONLY ONE parameter Returns the "opposite" of the value of the parameter
returns FALSE if the parameter value is TRUE returns TRUE if the parameter value is FALSE

135

Examples of Complex Nested Function Calls

=IF(AND(A2>A3, OR(B2=B3,C2<C3)), 500, 1000)

=IF(NOT(AND(A2>A3, OR(B2=B3,C2<C3))), 500, 1000)

=IF(AND(A2>A3, NOT(OR(B2=B3,C2<C3))), 500, 1000)

Other Logical Functions: ISBLANK

136

ISBLANK( <value> )

137

ISBLANK returns TRUE if the value is blank and false otherwise. (see example below) Total will be wrong if
Total will be correct even if quantity is blank (quantity is assumed to be 1 in that case) quantity is blank (since a blank is normally treated as zero)

Formula View

Values View

blank value

FORMATTING A CELL AS TEXT

138

139

Numbers with leading zeros

Sometimes you desire to have to have zeroes displayed at the beginning of a number. For example, US social security numbers are made up of 9 digits. The first few digits may be zeroes. This causes in a problem in Excel. When you type in a number with leading zeroes into a cell, Excel removes the leading zeroes when you press Enter. EXAMPLE: If you type the following into a cell (before you press Enter)

When you press Enter you get this:

Leading zeroes are missing

See next slides for how to fix this

140

Formatting a cell to display as text

To fix this problem you can format the cell to display as text instead of as a number. The value will still be able to be used in calculations but it will be displayed on the screen using the rules for text values instead of the rules to display numbers One of the rules Excel uses to displaying numbers is to remove leading zeroes. However, if a number displayed as "text" data then Excel WILL display leading zeros. See next slide for instructions on how to do this

Opening the "Format cells" dialog box

141

Select the cell or cells that you want to format as text. Right click on the selected cell(s) and choose the following from the popup menu format cells or click on a cell and choose the following menu choice format | cells Then you will see the "Format Cells" dialog box. (See the next slide ...)

"Format Cells" dialog box

Choose "Text" from the "Numbe r" tab and press the OK button.

142

143

Not a Perfect Solution

When you format the cell as text it will display the leading zeroes (you must type them in again). However, Excel will warn you that a number is formatted as text.

Result of Formatting a Number as Text

Excel indicates this issue with a green triangle in the upper left hand corner of the cell: If you select the cell you can see the error message. You can have Excel to ignore this type of error by choosing the Tools | Options menu choice and unchecking the Number stored as text option from the Error Checking tab. (this solution is not shown on this slide)

144

Create validation rules for data entry

You will want to prevent errors in your workbooks as much as possible.
You can specify the type of data that is allowed and/or a range of acceptable values If a value is entered that does not meet the requirements, an error message is displayed Setting a rule like this is a preventative measure that allows you to validate data upon entry

There are several different options in the Data Validation dialog box allowing you to provide various rules related to data entry. You can also provide an input message that will aid the user in entering the data.

The Data Validation dialog box

Menu Bar: Data \ Data Validation

The Allow list box options

The Input Message tab of the Data Validation dialog box

A worksheet with an input message displayed

The Error Alert tab of the Data Validation dialog box

Functions within functions

You can use functions within functions. Consider the expression =ROUND(AVERAGE(A1:A100),1).
This expression would first compute the average of all the values from cell A1 through A100 and then round that result to 1 digit to the right of the decimal point

Circular reference
Situation when some parameter in the formula refers to the formula itself For example, in cell C5 the following formula is entered: VLOOKUP(C5, F2:G15, 2, TRUE) The address C5 refers to the formula itself. In this case it is a wrong way of writing the formula. In some cases circular references may be used for creating recursive (recurrent) functions.

Tables, Graphs and Excel

Solving Problems Using Graphical Analysis

Tables
Tables should always have:
Title Column headings with brief descriptive name, symbol and appropriate units.

Numerical data in the table should be written to the proper number of significant digits.
The decimal points in a column should be aligned.

Tables should always be referenced and discussed (at least briefly) in the body of the text of the document containing the table.

Graphs
Proper graphing of data involves several steps:
Select appropriate graph type Select scale and gradation of axes, and completely label axes Plot data points, then plot or fit curves Add titles, notes, and or legend

Graphs - Types
1. Pie Chart
Travel Expenses
Travel Expenses
Motel 26% Gas 44% Food 31%
Expenses ($)
18 16 14 12 10 8 6 4 2 0

2. Bar Graph

Motel

Food

Gas

Graphs - Types
3. 3-D Graph
16

4. Line Graph
160 140
Pressure (kPa)

6 5 4 3

Temperature (C)

Object 1 Object 2

14 12 10 8 6 4 2 0 0 500 Height (m) 1000 Temp Pressure

120 100 80 60 40 20 0 1500

8 7 6 2 5 4 1 14 3 12 10 2 8 6 1 4 2 0 0

Graphs
Each graph must include:
A descriptive title which provides a clear and concise statement of the information being presented A legend defining point symbols or line types used for curves needs to be included Labeled axes

Graphs should always be referenced/discussed in the body of the text of the document containing the table.

Titles and Legends

Each graph must be identified with a descriptive title The title should include clear and concise statement of the information being presented A legend defining point symbols or line types used for curves needs to be included

Axis Labels
Each axis must be labeled The axis label should contain the name of the variable and its units. The units can be enclosed in parentheses, or separated from the label by a comma.

Length (km)

Gradation
Scale gradations should be selected so that the smallest division of the axis is an integer power of 10 times 1, 2, or 5. Exception is units of time.
Scale Graduations, Smallest Division=1
0 10 20 30 0

Scale Graduations, Smallest Division=3.33

10 20 30

Acceptable

Not Acceptable

Data Points and Curves

Data Points are plotted using symbols
The symbol size must be large enough to easily distinguish them A different symbol is used for each data set

Data Points are often connected with lines

A different line style is often used for each data set

Example
Velocity of Three Runners During a 5 km Race
10 9 8 7 Runner #1 Runner # 2 Runner # 3

Velocity (m/s)

6 5 4 3 2 1 0 0 1 2 3 4 5

Distance (Km)

The variability in the speed maitained by each of the three

Building a Graph In Excel

Select the data that you want to include in the chart by dragging through it with the mouse. Then click the Chart Wizard

Building the Graph

Choose XY (Scatter), with data connected by lines if desired. Click Next

Building the Graph

Make sure that the series is listed in columns, since your data is presented in columns. Click the Series tab to enter a name for the data set, if desired. Choose Next

Building the Graph

Fill in Title and Axis information Next

Building a Chart
Select As new sheet to create the chart on its own sheet in your Excel file, or As object in to create the chart on an existing sheet Finish

Creating a Secondary Axis

This is useful when the data sets cover very different ranges. Right click on the line (data series) on the chart that you want to associate with a secondary axis. Select format data series Select the Axis tab, then Plot series on secondary axis as shown. OK

Editing/Adding Labels
Now you can go back to the chart options to add labels Click the chart in a blank area, then either right click and select chart options or choose chart options from the Chart menu Fill in or edit the axes labels, title, etc. Click OK

Result

Goal Seek
Goal Seek is an analytical function that allows a value in a formula to be adjusted to reach a desired result or answer. Goal Seek can eliminate unnecessary calculations that can be used to determine a single variable value in a formula. For example, a salesperson might participate in a bonus program that pays 3 percent of all sales dollars. The salesperson wants to receive a bonus of at least $2,500 and needs to know the target sales dollar amount needed.

 Create a worksheet with the following information When the Goal Seek command starts to run, it repeatedly tries new values in the variable cell to find a solution to the problem.

This process is called iteration, and it continues until Excel has run the problem 100 times or has found an answer within .001 of the target value specified. The iteration settings can be adjusted by choosing Tools, Options, and adjusting the Iteration options in the Calculations tab. It calculates so fast, the Goal Seek command can save significant time and effort over the brute force method of trying one number after another in a formula.

Goal Seek

USING THE GOAL SEEK COMMAND

The Goal Seek feature is used to fill in the target value of the cell containing the Sales Dollar amount.
The Goal Seek values read Set cell = B3, To value = 2500, By changing cell = $B$1.

To use the Goal Seek command:

1. Select Tools from the main menu, then select Goal Seek. 2. Specify the cell that contains the desired value in the Set cell text box. Type in or select B3. 3. Enter the desired value or answer in the To value text box. Type in 2500. 4. Enter the cell whose value will be changed in the By changing cell text box. Type in or select $B$1. 5. The Goal Seek dialog box should look like Figure next slide 6. Choose OK.
a. If a solution is found, the Goal Seek Status dialog box appears. b. The results are shown in Figure T4.6.

7. Select OK.

Goal Seek is used to adjust a single variable in a formula. Use the Solver feature to adjust multiple variables in a formula, as described in the next section.

Goal Seek Worksheet

Goal Seek Results

Solver

Solver
Solver is part of a suite of functions sometimes called what-if analysis tools used for optimizing problems that contain more than one variable. The Solver add-in utility is needed to analyze the scenarios in decision-making situations that involve consideration of values and constraints for several variables simultaneously.

This powerful function uses multiple changing variables and constraints to find the optimal solution to solve a problem.
For example, consider a coffee shop that currently sells three beverages: (1) regular fresh-brewed coffee, (2) premium caffe latte, and (3) premium caffe mocha. The current price for regular coffee is set at $1.25, caffe latte at $2.00, and caffe mocha at $2.25, but the revenue potential is uncertain. What special emphasis (or marketing) should be given to each of the beverages to maximize revenue? Although the premium coffees bring in more money, their ingredients are more expensive and they take more time to make than regular coffee. Making some basic calculations by hand is easy, but there needs to be some structure to the sales data in a worksheet so that periodic changes can be made and analyzed.

Coffee Sales Data Sheet for Solver T4.7

Solver
The first step in using the Solver command is to build a Solver-friendly worksheet. This involves creating a target cell to be the goal of your problem
For example, a formula that calculates total revenueand assigning one or more variable cells that the Solver can change to reach the goal.

To use Solver, complete the following:

1. Set up a worksheet similar to Figure T4.7. 2. The three variable cells in the worksheet are cells D5, D9, and D13. These are the cells whose values the Solver needs to determine to maximize the weekly revenue. 3. In the bottom-right corner of the table is a list of constraints to use for forecasting. 4. The worksheet must contain cells (G6 through G8) that include the formulas used as constraints. The limiting values for the constraints are listed in cells G11 through G13.
No more than 500 total cups of coffee (both regular and premium). No more than 350 cups of premium coffee (both caffe latte and caffe mocha). No more than 125 caffe mochas.

Solver
5. The subtotals for cells D6, D10, D14 need to be calculated, as well as the Total Revenue (sum of D6, D10, and D14) in G4. 6. The value for cell G6 should equal the value that will be calculated for D5 and the value for cell G7 will be the sum of the values from D9 and D13. The calculation of G8 = SUM of D5, D9, and D13. 7. Click the target cell G4the one containing the formula that is based on the 8. variable cells you want the Solver to determine. 9. Select Tools from the main menu, then select Solver. The Solver Parameters dialog box opens, as shown in Figure T4.8.
a. b. Select the Set Target Cell text box (unless it already contains the correct reference), and then click cell G4 to insert $G$4 as the target cell. The Equal To option button (Max) is already selected. Do not change this since the problem requests the maximum value for the target cell.

10. Select the By Changing Cells text box. Click the button in the text box to collapse the dialog box. Select each of the variable cells by holding down the Ctrl key and clicking D5, D9, and D13. This places commas between the three cell entries in the text box: $D$5, $D$9, $D$13 (refer to Figure T4.9).

Solver
11.Click Solve to calculate the result. 12.Solver displays a dialog box describing the results of the analysis. If the Solver runs into a problem, an error message will be displayed. If the Solver finds a solution, a Solver Results dialog box like Figure T4.11 will appear. 13.To display the new solution in the worksheet, click the Keep Solver Solution option button, and then click OK. The Solver places an optimum value in the target cell and fills the variable cells with the solutions that satisfy the constraints specified and provide the optimal result, as shown in Figure T4.12.

Solver T4.8-T4.11

Optimum Revenue for Solver Results T4.12

Pivot Tables

PIVOT TABLES
A powerful built-in data-analysis feature in Excel is the PivotTable A PivotTable analyzes, summarizes, and manipulates data in large lists, databases, worksheets, or other collections It is called a PivotTable because fields can be moved within the table to create different types of summary lists, providing a pivot

What is an Excel Pivot Table?

An interactive worksheet table Provides a powerful tool for summarizing large amounts of tabular data Similar to a cross-tabulation table A pivot table classifies numeric data in a list based on other fields in the list General purpose: Quickly summarize data from a worksheet or from an external source Calculate totals, averages, counts, etc. based on any numeric fields in your table Generate charts from your pivot tables

Pivot Table Advantages

Interactive: easily rearrange them by moving, adding, or deleting fields Dynamic: results are automatically recalculated whenever fields are added or dropped, or whenever categories are hidden or displayed Easy to update: refreshable if the original worksheet data changes

Appropriate Data
Data arranged in a list: Columns represent fields Rows represent a record of related data First row = column label Columns contain one sort of data For example, text in one column and numeric values in a separate column Remove subtotals You CAN work with subtotals, but use caution De-normalized database extracts are great for pivoting!

Appropriate Data Example

Incomplete records:
First Sandra Last Archer Gender Semester F Fall 1999 Fall 2005 M Spring 2003 Summer 2005 Major Credit Hours Statistics 15 Industrial Engineering 6 Philosophy 12 Chemistry 12

Hamilton Paws

First Sandra Sandra Hamilton Hamilton

Last Archer Archer Paws Paws

Spelled the same

Gender F F M M

Semester Fall 1999 Fall 2005 Spring 2003 Summer 2005

Major Credit Hours Statistics 15 Industrial Engineering 6 Philosophy 12 Chemistry 12

Appropriate Data Example

Mixed use columns :
College Science Department Faculty Statistics Ima Faculty YTD Expenses: $4,000 History Hesa Prof YTD Expenses: $3,500 Art Salvador Dali YTD Expenses: $2,000 Credit Hours 16

Humanities

12

Humanities

24

Column Label

College Science Humanities Humanities

Department Statistics History Art

Faculty Ima Faculty Hesa Prof Salvador Dali

Credit YTD Hours Expenses 16 $4,000 12 $3,500 24 $2,000

Appropriate Data Example

Column label issues:
College Department Faculty Science Statistics Ima Faculty Humanities History Hesa Prof Humanities Art Salvador Dali YTD Expenses 2004 2005 $4,000 $5,000 $3,500 $4,500 $2,000 $3,000 2006 $6,000 $5,500 $0 Student Credit Hours 2004 2005 2006 16 19 22 12 15 18 24 21 0

College Department Faculty Science Statistics Ima Faculty Humanities History Hesa Prof Humanities Art Salvador Dali

YTD Expense 2004 $4,000 $3,500 $2,000

YTD Expense 2005 $5,000 $4,500 $3,000

YTD Expense 2006 $6,000 $5,500

Student Student Student Credit Credit Credit Hours Hours Hours 2004 2005 2006 16 19 22 12 15 18 24 21

Zero or Blank?

PivotTable Terminology
Some notable PivotTable terms are:
Row field - Row fields have a row orientation in a PivotTable report and are displayed as row labels Column field - Column fields have a column orientation in a PivotTable report and are displayed as column labels Data field - Data fields from a list or table contain summary data in a PivotTable, such as numeric data (e.g., statistics, sales amounts) Page field - Page fields filter out the data for other items and display one page at a time in a PivotTable report

PivotTable Terminology

Using the PivotTable Feature

1. Select the worksheet PivotTableData 2. Click any cell in the list 3. Select Data on the menu bar, then choose Pivot-Table and PivotChart Report

Using the PivotTable Feature

4. In the Where is the data that you want to analyze? area, choose Microsoft Excel list or database if it is not already selected 5. In the What kind of report do you want to create? area, choose PivotTable 6. Click the Next button
In the Range box, the range should be $A$1:$D$352

7. Click the Next button 8. Click Finish 9. Select New Worksheet

Using the PivotTable Feature

Using the PivotTable Feature

Drag the Business Segment button to the Page Field area Drag the Unit button to the COLUMN area Drag the Particulars button to the ROW area Drag the Amount button to the DATA area

Modifying A PivotTable View

PivotTable Tools
PivotTable - Contains commands for working with a PivotTable Format Report - Enables the user to format the PivotTable report Chart Wizard - Enables the user to create a chart using the data in the PivotTable Hide Detail - Hides the detail information in a PivotTable and shows only the totals Show Detail - Shows the detail information in a PivotTable

PivotTable Tools
Refresh External Data - Allows the user to refresh the data in the PivotTable after changes to data are made in the data source Include Hidden Items in Totals - Lets the user show the hidden items in the totals Always Display Items - Always shows the field item buttons with drop-down arrows in the PivotTable Field Settings - Displays the PivotTable Field dialog box so that the user can change computations and their number format Hide Field List - Hides and shows the PivotTable Field List window

Building A PivotChart
A PivotChart is a column chart (by default) that is based on the data in a PivotTable To build a PivotChart:
1. Click the Chart Wizard on the PivotTable toolbar
Excel will automatically create a new worksheet, labeled Chart 1, and display the current PivotTable information in chart form

2. Modifications to the PivotChart can be done by selecting the drop-down lists to the right of the field names

Building A PivotChart

Protect Sheet/ Workbook

Protect the contents of worksheets and workbooks

Once you have a worksheet that you know is correct, you may want to protect the worksheet so that users cannot make changes.
Setting the locked property will disallow any changes to a particular cell The worksheet will have to be protected in order for the locked property to have any affect

You can also specify a password that must be entered in order to remove worksheet protection. Finally, you can protect an entire workbook, which would disallow changes to the workbook, such as adding or deleting worksheets.

Unlocking Selected Cells

The Protect Sheet dialog box

The Protect Workbook dialog box

Financial Functions

Financial Function descriptions

This chart shows some commonly used financial functions and a description of what they do.

Excel's financial functions

Financial functions are very useful to calculate information about loans. Common functions are FV, IPMT, PMT, PPMT and PV. All these financial functions will use similar arguments that differ based upon which function you are using.
Think of the arguments as members of an equation The arguments represent the values of the equation that are known and the function provides the solution for a single variable, or unknown, value

 The FV function calculates the future value of an investment based on periodic, constant payments and a constant interest rate per period. The IPMT function provides the interest payment portion of the overall periodic loan payment. The PMT function calculates the entire periodic payment of the loan.

Use the financial functions

The PPMT function calculates just the principal payment portion of the overall periodic payment. The PV function calculates the present value of an investment.

Use the financial functions (contd)

NPER Determines the number of payments needed for an Investment to grow or pay back a loan RATE Determines the effective interest rate

Standard arguments
rate: Interest rate (in decimal) per period nper: Number of periods pmt: Regular payment

More standard arguments

pv: Present value: The amount the series of future payments is worth now. The beginning value.
Future value: The amount the series of future payments will be worth in the future. The final value.

fv:

type 0 = payment at end of period (default) 1 = payment at beginning

PMT( ) Payments
Returns the periodic payment for an annuity or loan PMT(rate, nper, pv, fv, type) The first 3 (red) arguments are required

PMT( ) Example
Ms Just Retired has $200,000 to invest at 10% annual interest. Her goal is to have $100,000 left after 5 years. If she makes equal withdrawals each year for 5 years, how much can she withdraw each year? PMT(rate, nper, pv, fv, type) = PMT(0.10, 5, -200000, +100000) = $36,380

PMT( ) Example

PV( ) Present Value

Returns the present value of an investment. The present value is the total amount that a series of future payments is worth now. That is, it is the beginning value of the investment or loan. PV(rate, nper, pmt, fv, type)

PV( ) Example
A person promises to pay you $200 per month for 3 years. If you assume 12% interest compounded monthly, what is this annuity worth today?

How much can you borrow at 12% annual interest compounded monthly and repay in 3 years paying $200 per month?
= -PV(0.12/12, 3*12, 200) = 6021.50

PV( ) Example

FV( ) Future Value

Returns the future (final) value of an investment. The future value is the total amount including interest that series of payments will be worth. How much money will there be in your account if you make regular payments for a period of time? FV(rate, nper, pmt, pv, type)

FV( ) Examples
You will make $200 a month payments into a 12% annual interest payable monthly account. How much will you have after 3 years? = -FV(0.12/12, 3*12, 200) = 8615.38 You will put $1000 in your account that pays 5% annually compounded monthly. You will add $100 to the account every month. How much will you have after 10 years? = -FV(0.05/12, 10*12, 100, 1000) = 17175.24

FV( ) Examples

IRR( ) Examples

IRR( ) Examples

NPV( ) Examples

SYD( ) / SLN () Examples

Formula View

Value View

Statistical Functions

Computing the Mean

Sum xi divide by n (or N for population mean) Excel
=AVERAGE(cellrange)

Computing the Mode

Value that occurs most often in discretized data Excel
=MODE(cellrange) Reports first value seen if tie

Computing the Median

The middle value in sorted data Excel
=MEDIAN(cellrange)

Computing the Range

Range is min to max values Excel
=MIN(cellrange)

=MAX(cellrange)

Computing the Standard Deviation

Std. Dev. is Square-Root of Variance Excel
=STDEV(cellrange) - sample =STDEVP(cellrange) - population =VAR(cellrange) - sample =VARP(cellrange) - population

Others Statistical Functions

Countif ( ) Countblank ( ) Subtotal ( ) Rank ( )

Mathematical Functions

Mathematical Functions
SUMIF ( ) SUMPRODUCT ( ) ROUND ( )
Roundup ( ) Rounddown ( ) MROUND ( )

FLOOR ( ) POWER ( )

Correlations

Correlations
A quick review: Every correlation has a direction (positive or negative): + correlation: high scores on one variable are associated with high scores on another variable. - correlation: high scores on one variable are associated with low scores on the other variable. Every correlation has magnitude or strength: The closer the correlation coefficient is to +1.00 or -1.00, the stronger it is. The closer the correlation coefficient is to 0.00, the weaker it is.

Correlation Practice

Put the following r values in order from weakest to strongest:

-.96 +.05 +.68 -.14 +.70 -.33

What did you get?

+.05 -.14 -.33 +.68 +.70 -.96
* Remember to use absolute values (ignore + or signs) when comparing the strengths of one or more correlation coefficients. Negative correlation does not mean less than positive correlation.

Correlation Example

Correlation Example

Lookup Functions

Lookup / Reference Functions

VLOOKUP ( ) HLOOKUP ( ) MATCH ( ) INDEX ( )

Lookup / Reference Functions

Conditional Formatting

Highlight Debt Equity Lower than 0.25 by using Conditional Formatting

Case Study I

Prioritization of Projects
This is a real life case You need to prioritize the investment in projects by working out composite scores Parameters for evaluation of Scores for each project are:
Project IRR Debt Equity Gestation Period Strategic Importance

Work out the Composite Score for the given projects

Case Study II

Preparation of Financial Model

This is the Most Important Case Study for the students who want to do their career in:
Finance Business Analyst Business Development Dept. Project Evaluation Risk Estimation

Preparation of Financial Model

Prepare following Financial Statement from given case study:
Project Cash Flow and IRR Equity Cash Flow and IRR Payback Period (Nominal & Exact) Profit & Loss Statement Balance sheet Interest & Debt Repayment Schedules Major Financial Ratios
DSCR ROCE Profit Margin etc

Preparation of Financial Model

Real Life Challenges:
Assumptions are changing:
Model should be sensitive to all the assumptions

Easy to Understand:
Model should not be un-necessarily complex Appreciation comes to you if others understands your work

Assumptions sheet should be easily identifiable Result should be identified easily Model should be checked for accuracy

Preparation of Financial Model - Assumptions

Capacity of Petrochemical Initial Price of Polymers Price Escalation 100000 Tons 10000 Rs/MT 10%

Variable Cost
Fixed Cost Capex of Plant Debt Equity Equity Portion Interest cost Corporate Tax Rate Dividend Payout Dividend Distribution Tax Gestation Period Marotorium Period

30% of Price
30% of Price 10,000 Lakhs 0.50 0.50 10% Percentage 33% Percentage 20% Percentage 15% Percentage 2.00 Years 2.00 Years

Repayment
Loan Tenor Economic Life of Project Project Tenor Discounting Rate

3.00 Years
5.00 Years 4.00 Years 6.00 Years 12% Percentage

Preparation of Financial Statements

Profit & Loss Statement Revenue Variable Cost Fixed Cost Total Expenditures Gross Margin (PBDIT) Depreciation Interest PBT Tax PAT Appropriations Dividend Balance Sheet Liabilities Share Capital Reserves Loan Total - Liabilities Assets Gross Block Less Depreciation Net Block IDC Calculations Capital Cost Debt Funding Equity Funding Total Funding Check for Funding Loan Schedule Openining Loan

Addition
Repayments Closing Loans Intrest Interest CWIP Interest P&L

IDC Funding
IDC - Debt Funding IDC - Equity Funding Capex Including IDC Debt Funding Equity Funding Cumulative Debt Funding Cumulative Equity Funding

CWIP
Current Asset Total - Assets Recon

Dividend Tax
Reserves

Preparation of Financial Statements

Project Cash Flows

Equity Cash Flows Outflow Inflows Net Project Cash flows Cumulative Cash Flows Project IRR Payback Period Exact Payback Period NAV

Ratio Analysis
ROCE DSCR Profit Margin

Outflow
Inflows Net Project Cash flows

Cumulative Cash Flows

Project IRR Payback Period Exact Payback Period NAV

Preparation of Financial Model

Now its your time Prepare the Financial Model

Real World is Complex, Does your model takes care of .

Complexities Funding Strategy Can change Interest Rate Can Change with time Change in Capacity Utilization Capital Expenditure Can vary with inflation Economic life of Project may reduce / Expand Project may complete Early or may also delay Yes

or No

Addition of Risks
Complex Tax calculations

THANK YOU