Principles of Finance with Excel Coursework 1

This report will examine the excel finding for four tasks including mean, mode median and
others for the data set of FIFA players also, it will show the two techniques that have been used
and the forecast revenue for the Microsoft company for next five years. Apple Stock and SPX
stock index is also one of the excel tasks so it will show some of the calculations for the returns,
variance and standard deviation also, the histograms also, a scatter diagram of the returns. The
last task will show mean, standard deviation and the correlations about the weekly returns for a
company and will use the matrix algebra to find the mean and standard deviation.

Task 1

The dataset includes 100 player’s names with some of their characteristics, for instance, their
value, age from 2017 till 2020 and their power of acceleration, ball control and penalties in the
pitch. The mean for the ages, which is the average of the numbers for the players for the four
years, is 27.69 and the middle number was 26 and mode was 25 in 2017. In 2020, the minimum
age was 21 and 42 was the maximum age for the players. Neymar who is playing for Paris Saint-
Germain was valued as the highest one as he valued 123 million and the last one was for the
Porto goalkeeper Icar Casillas with 3.50 million.

Over a time, most of the football players eventually see their field performance decrease.
According to Kalb (1999), “Muscles mass peaks at age 25 and then decreases by about 4
percent per decade until the age of 50”. The players within age 20 to 22 are more chosen for
the clubs however, they have less experience compared to the end of the twenties and
beginning of thirties as they have more experience and the dataset shows that they also have
more power in acceleration and ball control.

The most three popular players in the world are, Messi, Neymar, and Cristiano Ronaldo and the
below graph show the difference between them in their value, acceleration, ball control and
their power in penalties.

140
120
100
80 L. Messi Argentina FC
60 Barcelona
40 Neymar Brazil Paris
20 Saint-Germain
0
C. Ronaldo Portugal
Juventus

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Principles of Finance with Excel Coursework 1

The graph shows that there is a slight difference in acceleration and ball control between the
three players and for the penalties too. However, there is a huge difference between Neymar
and Ronaldo in the values. Neymar valued more than 120 million and Ronaldo is around 95
million. Messi who is known as the best and more talented player in the world his value is 105
million.

The dataset also shows that around 29% of the players play in Spanish clubs especially in
Barcelona and Real Madrid. In England is about 24% and Italy is 37%.

Task 2

The second task shows the financial statement for Microsoft from 2009 till 2018, that indicates
how the revenue is transformed into a net income. The income statement shows that the
revenue in 2009 was $58,437,000,000 and it increased to $110,360,000,000 in 2018.
$36,949,000,000 is the total expense in 2018 and it is the cost which occurs as a part of
company operating activities during the accounting period. The profit for Microsoft raised
down from $25,489,000,000 to $16,571,000,000 from the year 2017 to 2018. The purpose of
the income statement is to show for the managers and the investors whether the company
made or lost money during the period being reported.

There were used two techniques for the income statement the first one was the linear time
trend and polynomial order and the second was forecast revenue for the next five years. The
linear time trend is a best fit straight line by using the revenue and years for Microsoft. The
chart below shows that linear trend for Microsoft and as it clear, the r squared is 0.97 and it is a
good fit. The trend Line will be more reliable when the r squared value is at or near to 1.

$140,000,000,000.00
y = 5,318,848,484.85x + 52,807,333,333.33
$120,000,000,000.00 R² = 0.97

$100,000,000,000.00

$80,000,000,000.00

$60,000,000,000.00

$40,000,000,000.00

$20,000,000,000.00

$- 2
0 2 4 6 8 10 12 14
Principles of Finance with Excel Coursework 1

$140,000,000,000.00 y = 27,325,757.58x2 +
5,018,265,151.52x + 53,408,500,000.00
$120,000,000,000.00 R² = 0.97

$100,000,000,000.00

$80,000,000,000.00
Series1
$60,000,000,000.00 Poly. (Series1)

$40,000,000,000.00

$20,000,000,000.00

$-
0 2 4 6 8 10 12 14

The chart above is for Microsoft by using the polynomial order 2/3 forecasting techniques. As it
clear the trend line is a good fit because the r squared is 0.97. In the chart there is an equation
for the polynomial, this equation can be used to find the revenue for the future for the
Microsoft. Using polynomial order is useful for a company in analyzing gains or losses over a
large data set. The polynomial order 3 has a slightly difference between order 2. One of the
difference that order 3 has three intercepts and it is shown in the below chart.

$140,000,000,000.00 y = 43,547,008.55x3 -
691,199,883.45x2 +
$120,000,000,000.00 8,332,192,501.94x +
49,672,166,666.67
$100,000,000,000.00 R² = 0.97
$80,000,000,000.00
Series1
$60,000,000,000.00
Poly. (Series1)
$40,000,000,000.00

$20,000,000,000.00

$-
0 5 10 15

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Principles of Finance with Excel Coursework 1

The second technique is forecast revenue and it is the prediction of future values for the
revenue based on previous revenue for the company. For instance, the revenue for Microsoft
will increase to $111,314,666,666.67 in 2019. However, by 2023, the revenue will be around
$132,590,060,606.

The rest of the income statement for the future values from 2019 until 2023 was calculated by
using the change in income in 2018. By calculating the change in expenses, operating income,
and earnings before tax and income tax expense, the net income can be easily calculated. Also,
the EPS, gross margin, EBITDA and EBIT can be calculated in the same way. The net income in
the next five years will rise from $20,213,727,099 to $44,754,542,428.60.

Task 3

In task 3 there are a stock AAPL and stock index SPX of a weekly 5 years data which have been
taken from the Bloomberg. The return of stock and stock index on 9-11-18 was 8% and 2%. This
is the expected value of all the likely returns on investments comprising a portfolio. However,
before seven weeks, the return in stock was negative by -4% and the index was 1%. The
negative return mostly occurs when the business or a company made a financial loss.

The deviation measures how far the return was from the mean return. For example, on 21-09-
18, the deviation stock was -3% this means that the return is below the mean but, when it is
positive as the stock index on the same date by 1% is above the mean. For both the AAPL and
SPX, 46% of the deviation was above the mean and 54% below the mean. The standard
deviation is the square roots of the deviation. On 2-11-18, it was 0.00032 and 0.00037. This
number tells how measurements for the stock and stock index are spread out from the mean.

As calculated in excel, the average for the stock was -0.38% and for the index -0.01%. For the
AAPL, the greatest event in the market was 12.74% and the minimum was -11.07%. SPX higher
extreme events in the market were 6% and -4% was the least. This percents can be used as the
bins to do the histograms for the AAPL and SPX.

A histogram is a showcase of factual data that utilizes square shapes to demonstrate the
recurrence of information things in progressive numerical interims of the equivalent size it also
measures distribution characteristics of each stock return. The bins were from -12% to 14% and
using the stock and the bins, the
frequency can be found to do the
histograms.
AAPL The below two
charts show 100 the AAPL and SPX
80
histograms.
60
40 AAPL
20
4
0
12%
10%

14%
-8%
-6%
-4%
-2%
-12%
-10%

0%
2%
4%
6%
8%
Principles of Finance with Excel Coursework 1

SPX
150

100

50 SPX

0
-8%

10%
12%
14%
-6%
-4%
-2%
-12%
-10%

0%
2%
4%
6%
8%

Skewness is the asymmetry of a distribution around its mean. Also, it can be described as a
measure of a dataset symmetry. If the skewness was equal to zero, this means that it has
perfectly symmetrical data set. The skewness was 0.16707 and 0.92467. Both of the numbers
are positive, these show that there are more positive values than the negative values for the
stock and stock index.

15%
y = 1.02x - 0.00
R² = 0.25
10%

5%

0%
-6% -4% -2% 0% 2% 4% 6% 8%
-5%

-10%

-15%

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Principles of Finance with Excel Coursework 1

The above chart is the scatter diagrams for the returns of the stock and stock index. As AAPL is
on the vertical axis and SPX on the horizontal axis. The scatter plots show how is the stock is
affected by the stock index. Moreover, it shows how the two variables are connected together.
However, this diagram is used to find the correlations between the AAPL and SPX. After finding
the correlation, it will be easy to predict the behavior of the dependent variable based on the
measure of the independent variable. The graph include an equation (y= 1.02x- 0.00167), and
this include the y-intercept and the slope. The intercept is -0.00167. This number indicates that
the point where the line crosses the vertical y-axis. The Slope is equal to 1.02. This means that a
unit change in x, the independent variable will result in a change in y by the amount of b. R-
squared is equal to 0.25. This is a statistical measure of how close the data are to the fitted
regression line. It is also known as the coefficient of determination, or the coefficient of
multiple determinations for multiple regressions. The RSQ is too far away from 1 but, it is not
mean that is bad because low RSQ is most problematic when want to produce predictions that
are reasonably precise.

In a total of weekly returns, the together case is 200 almost and apart is about 80. It found that
together is more than the apart so, that means is averagely is the usually tend to move
together. The covariance and correlations were one of the question’s requirements. The
covariance is the mean value of the product of the deviations of the AAPL and SPX from their
respective means. It is equal to 0.00028, it is a positive number so it mover together and the
correlation is 0.50242. Both covariance and correlation describe the degree to which the stock
and stock index tend to deviate from their expected values.

Task 4

The last task contains five UK stocks of weekly five years and they are, AMZN, TSLA, NFLX, FB,
and RHT. Mean and the standard deviation has been calculated for the five stocks using the
data analysis in excel.

AMZN TSLA NFLX FB RHT

Mean 558.6319874 175.2730892 99.03190058 82.16508462 61.1792
Standard Deviation 371.016032 52.71856326 74.50043011 37.58278881 27.1544

The table above shows the numbers for the mean and standard deviation. The standard
deviation is the dispersion measurement of the stocks from its mean. The absolute variability of

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Principles of Finance with Excel Coursework 1

a distribution is measured; the higher the dispersion or variability, the greater the standard
deviation and the greater the value deviation from its mean. The table below shows the
correlations between the five UK stocks and as it shown that all the number are positives, this
means that when one stock is increasing, the other one is also increasing.

AMZN TSLA NFLX FB RHT

AMZN 1 0.788734087 0.977338506 0.90516 0.95243
TSLA 0.788734087 1 0.769712803 0.89468 0.82172
NFLX 0.977338506 0.769712803 1 0.86547 0.95411
FB 0.905164418 0.894676426 0.865468656 1 0.9052
RHT 0.952427293 0.821721757 0.954108598 0.9052 1

A matrix is a rectangular array of numbers in columns and rows (like a table). In statistics,
matrix algebra is used to express data collections. In the excel, mean and the standard
deviation was found by using the matrix algebra. The weights were given in the question and
“mu” was calculated by using the transpose function. “Mu” is the mean of stock returns.

For the weights in one and two, both of them were having the same mean and standard
deviation. The mean was -0.48% and standard deviation equal to 9.4528. Before using the
matrix algebra, the mean was -0.45% and standard deviation 1.3398 but after using the MMULT
function for the matrix algebra it changed and the new weight in matrix algebra was different
from the original weights.

Word Count: (1,905)

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Principles of Finance with Excel Coursework 1

References

Kalb, C. (1999, May 24). The Jock v. the Clock. Newsweek, 133(21), 76. Retrieved July 18, 2009,
from Academic Search Premier database.

https://wageindicator.co.uk/pay/vip-celebrity-salary/

https://www.spotrac.com/epl/liverpool-f.c/payroll/