Perform Financial Calculations

This book supports FNSACC303A Perform financial calculations in the Financial Services Training Package.

© Software Publications Pty Ltd, May 2013

Ian Berry - MIPA

ISBN 978-1-922012-61-6
3rd edition

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The basic functions of the handheld calculator are:

Calculator Function Explanation Symbol used in

symbol this workbook

+ Addition 3+2 +
– Subtraction 5–2 –
x Multiplication 7x2 x
÷ Division 10 ÷ 2 /
% Percentage 0.75 x 100 = 75% %
= Equals 3+2=5 =

Microsoft Windows Calculator

Microsoft Windows Calculator is located in the Accessories folder

OR

from the run dialogue box on the Start menu. In the Search programs and files box, type: Calc
to locate the calculator program.

The basic functions of the Windows Calculator are:

Calculator Function Explanation Symbol used in

symbol this workbook

Addition 3+2 +
Subtraction 5–2 –
Multiplication 7*2 x
Division 10 / 2 /
Percentage 0.75 x 100 = 75% %
Equals 3+2=5 =

16 © Software Publications Pty Ltd, 2013

 Section 1

Using numeric keypads

Standard desktop keyboards and some laptop keyboards have a numeric keypad on the right
side.

The numeric keypad arranges the numerals 0 through 9, the arithmetic operators + (addition),
– (subtraction), * (multiplication), / (division) and the decimal point as they would appear on
a calculator.

The images above show the arithmetic operators and location of the numbers are the same,
except for Enter – this replaces the = operator. These characters are duplicated elsewhere on
the keyboard, but the keypad arrangement allows you to enter numerical data or mathematical
operations rapidly with one hand.

The Num Lock key turns the numeric keypad on. If you are typing numbers from the numeric
keypad and the numbers are not appearing in the document press the Num Lock key.

To operate the calculator with the numeric keypad:

1. Open Calculator.

2. Check your keyboard light to see if Num Lock is on. If it is not, press Num Lock.

3. Using the numeric keypad, type the numbers and functions in the correct order.

4. Press Enter to complete the calculation.

Exercise 1
1. Open Calculator.
2. Check your keyboard light to see if Num Lock is on. If it is not, press Num Lock.
3. Using the numeric keypad, type in 25.
4. Using the numeric keypad, type + to add.
5. Using the numeric keypad, type in 5.
6. Press Enter ( = ) to complete the calculation. The result will be 30.
7. Close Calculator.

© Software Publications Pty Ltd, 2013 17

 Section 2

Formulas
The power of the spreadsheet is that it can contain formulas for any number of different
functions.

Click on the Formula tab and explore the Formulas Ribbon of Excel. Once data is added this
tool can assist you to perform any financial calculations.

AutoSum
The AutoSum function is the most used formula button in Excel. As a result an AutoSum
button is also located in the Editing Group on the Home Ribbon.

The drop-down list button next to the AutoSum button is used to select other functions, e.g.
average, maximum, minimum.

Currency
To apply dollar signs to figures, select the column or cell and press $ in the Number Group of
the Home Ribbon.

This will insert a dollar sign $ at beginning of the cell(s) and applies two decimal places.

© Software Publications Pty Ltd, 2013 37

 Saving a workbook file
It is important to save a workbook each time it has been edited to ensure changes are saved.
Saving should be done often.

To save a workbook:

F12 1. Click on the Quick Access toolbar. The Save As: box will display the default folder.

2. If you are using Windows XP, use the Places bar and the Save In: box to locate the folder
you are storing your files in.

If you are using Windows 7 use the Navigation Pane to locate your storage folder.

3. With Book1 (as show above or Book2, Book3, etc.) selected in the File name: box, type
an appropriate file name.

4. Click on the Save button. The workbook is saved in the selected folder. The file name
you have typed will appear on the Title bar at the top of the Excel screen.

Note
Ctrl S Once your workbook has been saved pressing Ctrl S will save an updated version of the file.

38 © Software Publications Pty Ltd, 2013

 Section 3

SECTION 3: INPUT DATA

Financial data sources
Financial data represents an accumulation of values resulting from one or more business
transactions. Generally, paperwork is called source documentation. Examples include:

 total daily sales figures from cash register receipts or invoices raised

 receipts and invoices from suppliers

 timesheets for payroll calculations

 bank statements for interest payments

 tax tables to calculate PAYGW (Pay As You Go Withholding) deductions

 price lists from suppliers.

Most businesses will use some form of accounting software to collate and total this data to
provide the summary data necessary to perform these calculations.

A business may also use data provided by government, industry bodies or financial
institutions to prepare calculations, for example:

Benchmarking Comparing operations of one business against the expected standards

CPI (consumer price
index)
Australian Bureau of
Statistics
Financial institutions
for the relevant industry sector.
The CPI is the official measure of inflation. Its use by business could
be by way of a lease on a business premises where the payments are
increased on a regular basis against the CPI.
Provides a range of statistical information that can be used by a
business in benchmarking, business development and marketing.
Provide calculators and other tools and resources to assist a business
to make decisions on general banking, borrowing and investing.

Any source documentation or other data must be used appropriately otherwise you may return
incorrect results. Documentation may come from computerised accounting packages, bank
statements or employee’s calculating their own hours of work, but mistakes can be made.

It is good practice to check the calculations on the source documentation prior to performing
any financial calculations. The best way to do this is to use a calculator or mental arithmetic
to check both line items and totals in any source document.

© Software Publications Pty Ltd, 2013 51

Data may also come from industry tables providing you with formulas or amounts to assist in
performing a calculation. A good example of this is the ATO PAYGW (Australian Taxation
Office Pay As You Go) withholding tax tables.

The above is an extract from the 2012/13 Weekly Tax Table for PAYGW. It shows the gross
weekly earnings (column 1) and then provides two columns relating to the tax free threshold –
either with (column 2) or without (column 3).

To use this table, select the gross weekly earnings and then select the amount of tax from the
appropriate column in 2 or 3.

Example
An employee earns $948 gross for the week and is claiming the tax free threshold. What is the
amount to be withheld?

Answer: $160.00 as underlined in the tax table above.

52 © Software Publications Pty Ltd, 2013

Error messages in Excel 2010
If you have applied incorrect arguments to a formula, the following error messages may
appear.

#DIV/0! Occurs when a formula is trying to divide by 0 or by a blank cell, e.g. you
create a division formula that refers to a cell that is blank.
#N/A No value is available to the formula.
#NAME? Excel does not recognise text used in a formula, e.g. when a function name
is misspelt.
#NULL! A specified intersection of two areas does not intersect.
#NUM! Problem with a number in the formula.
#REF! A reference to a cell is invalid, e.g. if cell references in a formula refer to
references in another worksheet that does not exist.
#VALUE! The wrong type of argument or operator has been used in the formula or
the formula contains an error for which Excel cannot suggest a solution,
e.g. referring to a cell in a formula that contains text instead of numbers.

Exercise 13
Walter needs to know the value of sales in his business is for a given week.

What source documentation would you ask Walter to provide?

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58 © Software Publications Pty Ltd, 2013