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Excel Help

Excel Help

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10/16/2013

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Financial Modeling in Excel
2011

Agenda
• Introduction and Context • Efficiently using excel – preparation for modeling • Excel – Summarization Using Pivot Tables

© Neev Knowledge Management – Pristine

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www.edupristine.com

Key Authorization

CFA Institute (2010-11) Authorized Training provider – CFA Pristine is now the authorized training provider for CFA Exam trainings . Pristine is largest training provider for CFA in India with presence across seven major cities.

GARP (2007-11) Authorized Training provider -FRM Largest player in India in the area of risk management training. Trained 1000+ students in risk management

FPSB India (2010-11) Authorized Training provider -CFP An authorized Education Provider for Chartered Financial Planner Charter.

PRMIA (2009-11) Authorized Training provider – PRM/ APRM Sole authorized training for PRM Training in India. Largest player in India in the area of risk management training. Trained 1000+ students in risk management

© Neev Knowledge Management – Pristine

www.edupristine.com

com . FSA and valuation. Analysis IT Professionals of CreditSuisse India were trained on risk management.edupristine.Key Associations* Ernst & Young (2010) Real Estate Modeling Senior Associates were trained on building valuation models for real estate Bank Of America Continuum Solutions (2010) Finance for Finance Associates were trained on valuation and mergers and acquisitions J. Analysis New joinees in HSBC had a gap in knowledge of Risk Management and quantitative skills. Conducted financial modeling in Excel trainings to bridge the gap ING Vyasa (2010) Infrastructure & Project Finance Bankers were trained on making integrated models for project finance and infrastructure. Morgan (2010) Financial Modeling in Excel The Real Assets Group were trained in Excel for infrastructure and realestate modeling Mizuho (2010) Financial Modeling in Excel Bankers were using excel models that they could not understand. Franklin Templeton CFA (2010) Students were facing a gap in the overall understanding of finance topics like corporate finance. P. Conducted trainings (On campus) to bridge the gap *Indicative List © Neev Knowledge Management – Pristine www. Provided training for over 100 hours to bridge the gap Credit-Suisse India (2009) Risk Management and Quant. HSBC (2008) Risk Management and Quant.

Conducted trainings for directors and CFOs for better understanding of derivative products IIT Delhi (2009) Corporate finance Students get placed in finance companies (UBS.…Key Associations NUS Business School (2011) Financial Modeling in Excel Second year MBA students were given a full 2-day workshop on creating financial models. NISM (2008-11) Derivatives in Hedging (2008) Financial Modeling (2011) Corporate in Ludhiana incurred huge losses because of derivative trades (for hedging). Conducted workshop to bridge the gap BITS Pilani (2009) Workshops on Basics of Finance Most of the students desire a career in finance.5+ IEMR Delhi (2010-11) Financial Modeling in Excel Final Year MBA students of IEMR went through extensive financial modeling workshop to acquire skills of financial modeling. Delhi University were trained in financial modeling so as to prepare them better for a job in finance. They learnt how to create integrated models of valuation.5+ FMS Delhi (2010-11) Financial Modeling in Excel Final Year MBA students of Faculty of Management Studies. GS. Conducted training for 350+ students with an average rating of 4. etc) with no understanding of the subject/ Job Profile. MS.com . Mumbai were trained in financial modeling so as to prepare them better for a job in finance. © Neev Knowledge Management – Pristine www. IIM Calcutta (2010-11) Financial Modeling in Excel Students about to go for internships and join jobs found a gap in their grasp of knowledge of excel for financial modeling. SIMSREE (2010) Final Year MBA students of Sydenham MBA. Conducted training for 75+ students with an average rating of 4.edupristine.

com .edupristine.Excel as the most important tool for modeling • Excel is one of the most widely used tools in financial industry – – – – – – Easy to use High reach & access to software across geographies Flexibility Robustness Inbuilt features (Most people would not even be using 95% of the features) & Extendibility Modular and Object Oriented Architecture • Excel as a data-store – Easy to store and retrieve information – Flexibility to put many data-types in the same sheet • Functions and a range of features – Excel is easily extendible to be used as a Modeling tool • Modeling Context – – – – – Understand the industry models being used Create your own models Rather than just using them Improve & enhance productivity in work Extend these models for your use Debug Problems © Neev Knowledge Management – Pristine 6 www.

edupristine.Agenda • Introduction and context • Efficiently using excel – preparation for modeling • Excel – Summarization Using Pivot Tables © Neev Knowledge Management – Pristine 7 www.com .

Key aspects of Modeling & Excel Usage • Building a ROBUST model is a must for other people to use your model – – – – – – – It should generate the correct results It should have proper area for Inputs/ Outputs It should be able to handle errors properly Naming/ Labeling of data items should be done properly Accidental changing of model parameters should be avoided The model should be easy to understand on computer and in printout Reusable components can be made in the excel sheet. It is necessary to navigate through the excel sheet in a speedy manner and understand it – It is a fact that mouse is 5 times slower than using the keyboard to use excel. which can be made later • SPEED is the key in modeling – A large model might have multiple excel sheets and a lot of formulas and calculations.edupristine. Due to heavy involvement of the users. having a strong command over the keyboard shortcuts is a must! – A well designed excel sheet is easy to understand as well © Neev Knowledge Management – Pristine 8 www.com .

Most of features of 2007 are backward compatible © Neev Knowledge Management – Pristine 9 www.com .edupristine.Lets take a moment to understand components of Excel Toolbar Formula Bar Cells Worksheet Name Excel 2007 Interface Excel 2003 and 2007 are being widely used in the industry.

com . Most of features of 2007 are backward compatible Excel 2007 Interface © Neev Knowledge Management – Pristine 10 www.… Lets take a moment to understand components of excel Excel 2003 and 2007 are being widely used in the industry.edupristine.

edupristine. "OK” then Manually change selection to blue font color Change all Formulas to Black: Select "Formulas" instead of "Constants“ then change selection to black color © Neev Knowledge Management – Pristine www.CTRL + S CTRL + C CTRL + V CTRL + X CTRL + Z CTRL + A CTRL + B ALT + TAB ALT + F4 CTRL + TAB Basic Editing and Saving Excel Save Workbook Copy Paste Cut Undo Select All Bold Switch Program Close Program Switch workbooks Some Special Shortcuts Paste Special Hide Row Unhide Row Hide Column Unhide Column Fit column width New worksheet Highlight row Highlight column Group rows/columns Ungroup rows/columns Delete selected cells Edit cells Navigating / Editing Move to new cells Switch worksheets Go to end of continuous range Select a cell Select range Select continuous range Move to beginning of line Move to cell “A1” Move to cell above Move to cell to the right Move to cell to the left Display a drop-down list CTRL + 1 ALT + H + 0 ALT + H + 9 SHIFT + CTRL + ~ SHIFT + CTRL + ! SHIFT + CTRL + # SHIFT + CTRL + $ SHIFT + CTRL + % CTRL + . = (equals sign) ALT + “=“ CTRL + ‘ CTRL + ~ F9 SHIFT + CTRL + Enter ALT + M + P ALT + M + D ALT + M + A + A CTRL + [ CTRL + ] F5 + Enter SHIFT + CTRL + { SHIFT + CTRL + } CTRL + ALT + V CTRL + 9 SHIFT + CTRL + 9 CTRL + 0 SHIFT + CTRL + 0 ALT + H + O + I SHIFT + F11 SHIFT + Spacebar CTRL + Spacebar SHIFT + ALT + SHIFT + ALT – CTRL + Minus sign F2 Formatting Format Box Increase decimal Decrease decimal General format Number format Date format Currency format Percentage format Enter the date Formulas Start a formula Insert AutoSum formula Copy formula from above cell Show formulas/values Recalculate all workbooks Enter array formula Auditing Formulas Trace immediate precedents Trace immediate dependents Remove tracing arrows Go to precedent cells Go to dependent cells Go back to original cell Trace all precedents (indirect) Trace all dependents (indirect) Inside the cell Editing Start new line in same cell Highlight within cells Highlight contiguous items Toggle “$” Cancel a cell entry Arrow keys CTRL + Pg Up/Down CTRL + Arrow keys SHIFT + Arrow keys SHIFT + CTRL + Arrow Home CTRL + Home SHIFT + ENTER TAB SHIFT + TAB ALT + ALT + ENTER SHIFT + Arrow SHIFT + CTRL + Arrow F4 ESC Change all Inputs to Blue: Press F5 then Select "Special" then "Constants".com .

Alt F for file • Use CTRL + TAB to Go to next toolbar • Use Arrow key to navigate further In 2007.com . Pressing the “ALT” key automatically shows the options © Neev Knowledge Management – Pristine 12 www.edupristine.Moving across toolbars in Excel 2003 and 2007 • Press Alt Key to activate Main toolbar – For Example.

Cell Referencing .$ • Use $ for Absolute Reference – A1 vs $A1 vs A$1 vs $A$1 • What happens when you copy paste cells Source $A$1 A$1 $A1 A1 $A$1 C$1 $A3 C3 Destination • Change the referencing of a cell by F2 + F4 Refer Worksheet A © Neev Knowledge Management – Pristine 13 www.com .edupristine.

– Use worksheet B – Hint • • • • Use (P(t)/ P(t-k))^(1/k) -1 to calculate CAGR Use AND function to calculate eligibility Use IF function to print it Use conditional formatting to output the results • Email ids of 100 people are given to you.com .edupristine. They all need to be migrated to a new domain of edupristine. Also visually indicate the eligibility. The company would be eligible for funding if their operating profit margin is greater than 35% and CAGR in revenue growth is greater than 50%.com.Simple Exercises in Excel • The financials of a start-up company are given to you. Write a function to migrate all email ids to new domain – Use worksheet C – Hint • Use FIND to find the common character • Use LEFT function • Use CONCATENATE function © Neev Knowledge Management – Pristine 14 www. Create a model to check if the company is eligible for funding.

but list of cells as an individual entity – Since individual cells are not independent entities.edupristine. so they cannot be changed individually – Enables apply a formula to every cell in the range using just a single operation • For any matrix Operation – Calculate the exact size of the transposed Matrix • Select the appropriate range – Use the function – Press SHIFT + CTRL + ENTER • Use Worksheet D To Run Array Functions – Remember to use CTRL + SHIFT + ENTER © Neev Knowledge Management – Pristine 15 www.com .Arrays in Excel • Array (Can be loosely thought of as a list) is a group of cells or values that Excel treats as a unit – No longer treats the cells individually.

edupristine.com .Frequently Used Array functions Function Name SUMPRODUCT() TRANSPOSE() To Sumproduct 2 matrices To transpose a matrix Function MATCH() INDEX() VLOOKUP() COLUMN() ROW() Match and Index are used in conjunction as a lookup function Match and Index are used in conjunction as a lookup function To lookup for a particular value in array. with the top row acting as lookup reference © Neev Knowledge Management – Pristine 16 www. with the starting column acting as a lookup reference Returns the column number of the cell referenced Returns the row number of the cell referenced HLOOKUP() To lookup for a particular value in array.

Always use FALSE.for exact match – Whenever looking for data picked from the net.Using the VLookUp Function • VLOOKUP() function – The V in VLOOKUP() stands for vertical – Works by looking in the first column of a table for the value you specify – It then looks across the appropriate number of columns (which you specify) and returns whatever value it finds there – The final option (range_lookup) is a Boolean value that determines how Excel finds the value.edupristine. • Column F contains the IDs of your clients.com . One of the most widely used functions in Excel © Neev Knowledge Management – Pristine 17 www. trim the strings before comparison • Question (Use WorkSheet E) • The ID of defaulters and their amount and phone number has been provided by the Credit Bureau in Columns A to D. Use Vlookup function to find out the default amount of your clients.

Write a function to calculate the total expenses for any desired month (user should be able to change this value.edupristine. and automatically the expenses should be updated) Both Vlookup and Hlookup have a limitation of using the first Column/ Row as reference © Neev Knowledge Management – Pristine 18 www.Using the HLookup Function • HLOOKUP() function is – H in HLOOKUP() stands for horizontal – Similar to VLOOKUP() – It searches for the lookup value in the first row of a table • Question: Use Worksheet F • Various expenses of Pristine are given in a table.com .

edupristine.Index & Match Functions • INDEX() returns the reference or the value of a cell at the intersection of a row and column inside a reference • MATCH() function – looks through a row or column of cells for a value – If it finds a match. it returns the relative position of the match in the row or column – Use the usual wildcard characters within the lookup_value argument (provided that match_type is 0 and lookup_value is text) – Use the question mark (?) for single characters and the asterisk (*) for multiple characters – See Worksheet G © Neev Knowledge Management – Pristine 19 www.com .

Write a function to calculate the desired expense head for any desired month (user should be able to change both the values.edupristine.com .Use Index and Match – Any Column & row Lookup • Index and Match can be used in conjunction to perform complex lookup functions – Use Match to generate the row number that you are interested in – Use Index to generate the value that you are looking for – Similar to implementation of a new kind of directory service Always Use FALSE in the boolean required for comparison • Use Worksheet H • Various expenses of Pristine are given in a table. and automatically the expenses should be updated) Easily Extendible approach to get any generalized kind of search (where both row and column can be variable) © Neev Knowledge Management – Pristine 20 www.

com .Agenda • Introduction and context • Efficiently using excel – preparation for modeling • Excel – Summarization Using Pivot Tables © Neev Knowledge Management – Pristine 21 www.edupristine.

com .edupristine.Pivot Tables – An introduction Easy Summarization & Analysis Tool © Neev Knowledge Management – Pristine 22 www.

com .Pivot Tables • Summarize data in one field – called a data field • and break it down according to the data in another field.edupristine. – The unique values in the second field (called the row field) become the row headings • Further break down your data by specifying a third field – called the column field © Neev Knowledge Management – Pristine 23 www.

such as Region. and page labels © Neev Knowledge Management – Pristine 24 www.com . or date values that you use to filter the PivotTable view • PivotTable items: The items from the source list used as row. or date values to use as column labels for the PivotTable • Report filter: A field with a limited set of distinct text. numeric. column. or Sales – Most PivotTables are derived from tables or databases. imported data. Quarter. numeric.Terms used in Excel • Data source: The original data – Range. a PivotTable field is directly analogous to a table or database field • Row field: A field with a limited set of distinct text. or date values to use as row labels in the PivotTable • Column field: A field with a limited set of distinct text.edupristine. • Field: A category of data. a table. numeric. or an external data source.

Summarize Large Data • To start the pivot wizard: – ALT D + P – To complete the process. Year wise sales – Give Product wise Data for 2008 Only © Neev Knowledge Management – Pristine 25 www. press finish • Use Example I – Calculate Region Wise.edupristine.com .

Year wise sales – Give Product wise Data for 2008 Only © Neev Knowledge Management – Pristine 26 www.edupristine. press finish • Use Example I – Calculate Region Wise.Summarize Large Data • To start the pivot wizard: – ALT D + P – To complete the process.com .

com .edupristine.Filtering for Particular Rows/ Columns • Use Example I – Calculate Region Wise. Year wise sales – Give Product wise Data for 2008 Only – Get Data only for Delhi © Neev Knowledge Management – Pristine 27 www.

instead. Select. click Sort Oldest to Newest or Sort Newest to Oldest. and then click either Sort A to Z or Sort Z to A. Values. click the PivotTable element you want to select: Labels and Values. In the list. Select. choose the Options tab.edupristine.) • Refreshing PivotTable data: Choose Options and then click the top half of the Refresh button • Filtering the PivotTable: Click-and-drag a field to the Report Filter area. Entire PivotTable • Selecting PivotTable items: Select the entire PivotTable.com . or Labels • Formatting the PivotTable: Choose the Design tab and then click a style in the PivotTable Styles gallery • Sorting the PivotTable: Click any label in either the row field or the column field. drop down the report filter list.Other Customization Options … • Selecting the entire PivotTable: Choose Options. then choose Options. (If the field contains dates. and then click an item in the list © Neev Knowledge Management – Pristine 28 www.

Year wise sales – Give Product wise Data for 2008 Only – Get Data only for Delhi – Instead of Total.Give the average sales in regions • Use Example I – Calculate Region Wise.com .edupristine. give the average sales © Neev Knowledge Management – Pristine 29 www.

Year wise sales – Give Product wise Data for 2008 Only – Get Data only for Delhi – Instead of Total. give the average sales – Calculate the forecast for sales in 2009 © Neev Knowledge Management – Pristine 30 www. Calculated Field – Excel displays the Insert Calculated Field dialog box – Use the Name text box to enter a name for the calculated item – Use the Formula text box to enter the formula you want to use for the calculated item • Use Example I – Calculate Region Wise.Changing the Pivot Table • Click any cell in the PivotTable’s data area • Choose Formulas.com .edupristine.

which has been deleted Argument/ Operand of the wrong type Problem in value Typically when a +ve number is expected.edupristine.com .Errors in Functions Error Meaning # DIV/ 0! Divide by Zero Error Generally seen when trying to divide by empty cell Function name not found error Generally seen in misspelling of function Data Not available Quite often seen Vlookup cannot find data Invalid Cell reference Typically when a cell is referenced. and –ve number is given as argument # NAME? # N/A # REF! # VALUE! # NUM! Important to understand what kind of error can occur and handle it properly © Neev Knowledge Management – Pristine 31 www.

edupristine.com . if there are any exceptions in the formulas – Handle exception and exit the error gracefully • Excel 2007 also has an IFERROR() function to handle errors • Use Worksheet E to handle the errors and display “Not Defaulted” © Neev Knowledge Management – Pristine 32 www.Use ISERROR() to Handle Errors • Excel 2003 has ISERROR() to determine.

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