SADHU VASWANI INSTITUTE OF MANAGEMENT

STUDIES FOR GIRLS, PUNE

NAME: Mariya Iqbal Pithawala

ROLL NO.: 18114
CLASS: MBA PART II

SUBJECT: 406 FIN, Financial Modelling using Excel

SUBJECT TEACHER: Dr. Abhijeet Kaiwade

Assignment 5
DATE OF SUBMISSION:
 I. LEARNED AND USEFUL FUNCTIONS:
1. Net Present Value (NPV):

Net Present Value or NPV essentially shows you what a future stream of cash from is worth today
given your ‘cost of capital’ or ‘discount rate’. We also have a lovely infographic that explains what
the time value of money is. The Microsoft Excel syntax for the NPV function is “=NPV(discount
rate, cashflow 1, cashflow 2, cashflow 3, ……)”.

2. Internal Rate of Return (IRR):

The Internal Rate of Return or IRR essentially tells you the effective interest you would have on a
stream of payments. The Microsoft Excel syntax for the IRR function is = IRR(cashflow 1,
cashflow 2, cashflow 3 … , discount rate guesstimate). In excel you will see it as “=IRR(values,
guess)”.

3. PMT to Compute Loans Payments:

stands for ‘payment’) calculates the monthly or periodic payment for a loan or borrowing. This
function is very useful to calculate the monthly payment on a home mortgage or a car loan. The
Microsoft Excel ‘PMT’ function assumes that the payment will be a constant stream of payments
at fixed period intervals of time and loan or borrowing with be at a constant rate of interest. The
Microsoft Excel syntax for the PMT function is PMT(interest rate, number of periods, present
value of the loan, future value of the loan, payment type-beginning or ending). In excel you will
see it as “=PMT(rate,nper,pv,fv,type)”.

4. Pivot Tables & Charts:

he pivot tables and charts feature in Microsoft Excel is arguably the single most useful tool. It
quickly helps you summarize and analyze a larger or small set of data. The Microsoft Excel syntax
for the pivot table function is GETPIVOTDATA(data_field, pivot_table, [field1, item1, field2,
item2], …) If this formula is complicated you can ignore this and simply enter =GETPIVOTDATA
and link it to the cell in the PivotTable report whose content you want to pull out.

5. IF Function

The If function is among the most versatile function of Microsoft Excel allowing you to model
logical thinking into Microsoft Excel. The Microsoft Excel IF function first checks if the specified
condition is true and if it is true specifies the outcome of the situation. If the function is not true or
it is false, then the if function false, specifies another outcome for the situation. There is probably
no limit to the uses and application of the IF function. You could have a single logic instruction
alone or have multiple sets of logical functions built into one Microsoft Excel cell using the IF
function (nested If functions). The IF function can be used alone or in combination with other
Microsoft Excel functions. The Microsoft Excel syntax for the If function is IF(provide the logic
you want to evaluate, [provide the outcome if the logic is true or satisfied], [provide the outcome
if the logic is false or NOT satisfied]). Inside the Microsoft Excel cell you will see it as “=
IF(logical_test, [value_if_true], [value_if_false])”.

6. VLOOKUP & HLOOKUP Functions:

The lookup functions VLOOKUP and HLOOKUP are also very handy. VLOOKUP stands for
vertical look up where you ask Microsoft Excel to look up a value in a row (top to bottom) and
pull out a corresponding cell’s contents from an array. HLOOKUP stands for horizontal look up
where you ask Microsoft Excel to look up a value in a column (left to right) and pull out a
corresponding cell’s contents from an array. The VLOOKUP and HLOOKUP are not to be
confused with the lookup function which is also used for a similar purpose. We prefer the
VLOOKUP and HLOOKUP as they are more robust and less error prone! The Microsoft Excel
syntax for the VLOOKUP function is VLOOKUP (lookup the value, in this table array, and pull
out the column number, specify if you want an exact match or if an approximate match is
sufficient). Inside the Microsoft Excel cell you will see it as VLOOKUP (lookup value,
table_array, col_index_num, [range_lookup]). The Microsoft Excel syntax for the HLOOKUP
function is HLOOKUP (lookup the value, in this table array, and pull out the column number,
specify if you want an exact match or if an approximate match is sufficient). Inside the Microsoft
Excel cell you will see it as HLOOKUP (lookup_value, table_array, col_index_num,
[range_lookup]).

7. Fixed Reference / Absolute Reference:

The fixed reference also called absolute reference is a Microsoft Excel technique that you could
definitely use on a daily basis! Fixed reference or absolute reference refers to the practice of linking
to a ‘fixed’ or unchangeable cell when you are copying and moving formulas in a Microsoft Excel
file. We use the fixed or absolute reference in a Microsoft Excel formula to refer to cells that we
don’t want to change as the formula is copied and pasted elsewhere. The opposite of a fixed
reference or absolute reference is called relative reference. When you provide a relative reference
inside a formula, and we copy the contents of the formula and paste it elsewhere, it will not pick
up the inputs from the original cell but from the same relative position in reference to the cell it is
copied. When you use a formula that references the content in another cell the references are
relative by default. To make it a fixed reference or absolute reference, so you would have to type
dollar signs before the column alphabet and row number.

8. COUNT Function:

The count function in Microsoft Excel includes the simple count function COUNT (specified
range) counts the number of cells that contain numbers within the specified range. Inside the
Microsoft Excel cell you will see it as “=COUNT(A1:A20)”. Other members of the COUNT
family include COUNTA which counts the number of cells that are not empty inside a specified
range of cells, COUNTBLANK which counts empty cells inside a specified range of cells,
COUNTIF which counts the number of cells within a range that meet the given criteria.
 9. SUM Function:

he sum function in Microsoft Excel includes the simple sum function SUM (specified range) sums
up the values of cells that contain numbers within the specified range. Inside the Microsoft Excel
cell you will see it as “=SUM(number1,[number2],…])”. Other members of the SUM family
include SUMIF and SUMIFS which adds conditions to be satisfied before the values of cells that
contain numbers within the specified range are added up. This family of functions is very useful
for financial modeling and other types of operations modeling.

10. TREND Function:

Making a judgment or decision on the future is an essential part of management. We need to

forecast revenues, costs, capacity utilization, etc. using historical information. Microsoft Excel has
a nifty function called TREND. The TREND function generates the desired values for the decision
assuming the trend (linear) continues along the established path. The Microsoft Excel TREND
function fits a straight line using the same method used in a full blown regression analysis which
is the least squared method. The Microsoft Excel TREND function is written with these
instructions get the TREND(using the historical pattern of known_y’s and known_x’s and given
me the corresponding values for a new set of day which is specified in a array new_x’s. Inside the
Microsoft Excel cell you will see it as “=TREND(known_y’s,known_x’s,new_x’s,const)”.

II. TYPES OF GRAPHS:

1. Line Chart: The line chart is one of the most frequently used chart types, typically used to
show trends over a period of time. If you need to chart changes over time, consider using
a line chart.

2. Column Chart: Column charts are typically used to compare several items in a specific
range of values. Column charts are ideal if you need to compare a single category of data
 between individual sub-items, such as, for example, when comparing revenue between
regions.

3. Clustered Column Chart: A clustered column chart can be used if you need to compare
multiple categories of data within individual sub-items as well as between sub-items. For
instance, you can use a clustered column chart to compare revenue for each year within
each region, as well as between regions.

4. Stacked Column Chart: A stacked column chart allows you to compare items in a specific
range of values as well as show the relationship of the individual sub-items with the whole.
 For instance, a stacked column chart can show not only the overall revenue for each year,
but also the proportion of the total revenue made up by each region.

5. Bar Chart: Bar charts are typically used to compare several categories of data. Bar charts
are ideal for visualizing the distribution or proportion of data items when there are more
than three categories. For instance, a bar chart could be used to compare the overall revenue
distribution for a given set of products.

Area Chart: Area charts are ideal for clearly illustrating the magnitude of change between two or
more data points. For example, you can give your audience a visual feel for the degree of variance
between the high and low price for each month.
Combination Chart: A combination chart is a visualization that combines two or more chart types
into a single chart. Combination charts are an ideal choice when you want to compare two
categories of each individual sub-item. They are commonly used to create visualizations that show
the difference between targets versus actual results.

XY Scatter Plot Chart: Scatter charts in Excel (also known as XY scatter plot charts) are
excellent for showing correlations between two sets of values. For example an XY scatter plot can
be used to illustrate the correlation between employee performance and competency,
demonstrating that employee performance rises as competency improves. The x and y axes work
together to represent data plots on the chart based on the intersection of x values and y values.
Bubble Chart: A bubble chart is a variation of an XY scatter plot. Just like the XY scatter plot,
bubble charts show the correlation between two sets of data. The difference is the addition of a
third dimension that is represented by the size of each bubble in the chart. This third dimension is
typically used to show the relative impact of a quantitative data item. For instance, in addition to
showing employee performance versus competency, you can have the size of each bubble
represent years of service, allowing your audience to quickly get a sense of how years of service
may affect the relationship between competency and performance.

III. Data cleaning functions, creating tables, Filtering functions, Special

functions using tables:
A. Data Cleaning Function

You don't always have control over the format and type of data that you import from an external
data source, such as a database, text file, or a Web page. Before you can analyze the data, you
often need to clean it up. Fortunately, Excel has many features to help you get data in the precise
format that you want. Sometimes, the task is straightforward and there is a specific feature that
does the job for you. For example, you can easily use Spell Checker to clean up misspelled words
in columns that contain comments or descriptions. Or, if you want to remove duplicate rows, you
can quickly do this by using the Remove Duplicates dialog box.

At other times, you may need to manipulate one or more columns by using a formula to convert
the imported values into new values. For example, if you want to remove trailing spaces, you can
create a new column to clean the data by using a formula, filling down the new column, converting
that new column's formulas to values, and then removing the original column.

The basic steps for cleaning data are as follows:

1. Import the data from an external data source.

2. Create a backup copy of the original data in a separate workbook.
3. Ensure that the data is in a tabular format of rows and columns with: similar data in each
column, all columns and rows visible, and no blank rows within the range. For best results,
use an Excel table.

Do tasks that don't require column manipulation first, such as spell-checking or using the Find and
Replace dialog box.

Next, do tasks that do require column manipulation. The general steps for manipulating a column
are:

Insert a new column (B) next to the original column (A) that needs cleaning.

Add a formula that will transform the data at the top of the new column (B).

Fill down the formula in the new column (B). In an Excel table, a calculated column is
automatically created with values filled down.

Select the new column (B), copy it, and then paste as values into the new column (B).

Remove the original column (A), which converts the new column from B to A.

Creating tables:

Insert a table in your spreadsheet.

Select a cell within your data.

Select Home > Format as Table.

Choose a style for your table.

In the Format as Table dialog box, set your cell range.

Mark if your table has headers.

Select OK.

Filtering Function: The Excel FILTER function returns a range filtered on criteria you define. It
can also handle multiple AND/OR criteria. The syntax is: =FILTER(array, include, [if_empty])

Array is the range or array containing the values you want filtered.

include is the logical test that returns a Boolean array (TRUE/FALSE) the same height or width
as the array.

if_empty is an optional value to return if the included array are empty i.e. if the filter results in no
records.

Special Functions:

The Go To Special function in Excel allows you to quickly select all cells that meet certain criteria,
such as cells containing:

Formulas (numbers, text, logicals, errors)

Constants (numbers, text, logicals, errors)

Blank cells

Objects

Precedents and dependents

There are three ways to access Go To:

Press the F5 key

Press Ctrl + G

On the Home ribbon under “Find and Select” choose “Go To”

IV. Steps for creating defined model

Excel allows you to create custom functions using VBA, called "User Defined Functions" (UDFs)
that can be used the same way you would use SU() or other built-in Excel functions. They can be
especially useful for advanced mathematics or special text manipulation or date calculations prior
to 1900. Many Excel add-ins provide large collections of specialized functions.

STEPS TO CREATE DEFINED MODEL

Open a new Excel workbook.

Get into VBA (Press Alt+F11)

Insert a new module (Insert > Module)

Copy and Paste the Excel user defined function examples

Get out of VBA (Press Alt+Q)

Use the functions - They will appear in the Paste Function dialog box (Shift+F3) under the "User
Defined" category

V. Preparing the reports output and presentation: -

Excel is a powerful reporting tool, providing options for both basic and advanced users. One of
the easiest ways to create a report in Excel is by using the PivotTable feature, which allows you to
sort, group, and summarize your data simply by dragging and dropping fields.

First, Organize Your Data

Record your data in rows and columns. For example, data for a report on sales by territory and
product

A PivotTable report works best when the source data have:

1. One record in each row;

2. One column for each category for sorting and grouping (such as “Territory” and “Product” in
the example above; and

3. One column for each metric (such as “Units Sold” and “Sales Revenue” above). Recording some
sales revenue in a different column complicates the task of adding up all of the sales revenue.

Create the PivotTable

Next, create the PivotTable report:

1. Highlight your data table.
2. From the Insert ribbon, click the PivotTable button.

3. On the far right, select fields that you would like on the left-hand side of the report and drag
them to the Rows box.

4. Also on the far right, select fields that you would like to appear across the top of the report and
drag them to the Columns box.

5. Select the data that you would like to summarize and drag it to the Values box.

6. For each item under Values, specify how to aggregate the data—with a sum, average, or some
other function. This is a great time-saving step!

With each change, you’ll see your PivotTable report take shape. If you decide you don’t like the
layout, just drag the fields to other positions.

Formatting Your PivotTable Report

From the PivotTable Design ribbon, choose a style for your report based on your theme’s color
schemes with options for header rows, header columns, totals, and subtotals. From the Home
ribbon, set the number format for your data, or right-click your data, choose Value Field Settings,
and click Number Format.

Other Report Options

Do you want even more flexibility in your reports? Do you ever need to, say, connect to data in an
external database or create charts based on your reports? All of these options are available with
PivotTables!

Or, if you need more flexibility than PivotTables provide, you can:
1. Create a freeform report by adding totals and subtotals directly to your source data,

2. Use the Group and Subtotal options on the new Outline section of the Data ribbon, or

3. If you’re using Excel 2013, use the new Quick Analysis button.