ba accounting skills lecture 1

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Using Excel Functions

and Formulas

Abdisalam Issa-Salwe

Faculty of Professional Studies

Thames Valley University

Abdisalam Issa-Salwe, Thames Valley University

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Function

Using Function

Function – a predefined computational task

Requires arguments Values the function uses to calculate

answers

Returns a value

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Function wizard


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Statistical Functions

MAX, MIN, and AVERAGE functions Return highest, lowest, and average values from an argument list

Argument list may include cell references, cell ranges, values, functions, or formulas

Cells that are empty or contain text are not included

COUNT and COUNTA functions COUNT returns number of cells containing

numeric entries or formulas that return a number

COUNTA also includes cells with text

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Statistical Functions (cont…)

In general, use functions instead of formulas

Functions are adjusted as rows or columns are deleted or added within the range referenced the function

With formulas Adding a row adjusts the cell references

in the formula, but does not include the new row in the formula

Deleting a row causes a #REF error message


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The IF Function

Enables decision making in a worksheet

Requires three arguments: A condition

A value if the condition is true

A value if the condition is false

Condition must be able to be

evaluated as true or false

Uses relational operators (=, <, etc.)

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VLOOKUP function

Allows Excel to look up a value in a table and return a related value

Requires three arguments: the numeric value (or cell) to look up

the range of the table

the column number containing the value you want to return

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PMT Function

PMT Function

Calculates a periodic payment, such as a car or mortgage payment

Based on: Amount financed

Interest rate

Number of periods

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Using PMT function


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Goal Seek

The Goal Seek Command

Allows you to set an end result and vary the inputs (assumptions) to produce that result

Only one input can be varied at a time All other assumptions remain constant

For example, set a desired monthly car payment

Vary the amount financed

Interest rate and number of months remain the same

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Using Goal Seek


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Use a what-if analysis

Suppose you think that it might be better for the students if you limited the enrolment to 40. How would you calculate the net income?

On the spreadsheet that you have set up to figure the profits, change the number of students from 60 to 40, and recalculate.

The spreadsheet will show a net income of $5000.

Thus, at only 40 students, the school would lose $5,000 per month.

This process of changing the value of a variable in a calculation to see how the new answer compares with the old answer is called a what-if analysis.

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Data tables

Data tables are part of a suite of commands sometimes called what-if analysis tools.

A data table is a range of cells that shows how changing certain values in your formulas affects the results of the formulas.

Data tables provide a shortcut for calculating multiple versions in one operation and a way to view and compare the results of all of the different variations together on your worksheet.


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Data tables (cont…)

Use a one-variable data table if you want to see how different interest

rates affect a monthly mortgage payment.

In the following example, cell D2

contains the payment formula, =PMT(B3/12,B4,-B5), which refers

to the input cell B3.

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Two-variable data tables

A two-variable data table can show how different interest rates and loan

terms will affect the mortgage payment.

In the following example, cell C2

contains the payment formula, =PMT(B3/12,B4,-B5), which uses two input cells, B3 and B4.

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Data tables recalculate whenever a worksheet is recalculated, even if

they have not changed.

To speed up calculation of a worksheet that contains a data

table, you can change the Calculation options to automatically

recalculate the worksheet but not data tables.

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Use two-variable data tables to

perform a what-if analysis

Excel provides the capability to create two-variable data tables, which allow two input variables, and one result variable.

The data table will have the values for one input variable across the top row of the table, and the values for the other input variable down the first column

Excel can create a data table that will display the net income based on different tuition values and different student counts.

As with a one-variable data table, to create a two-variable data table in Excel, you must first create a spreadsheet that calculates net income based on the number of students and the amount of tuition

Once the spreadsheet is set up, you can create the two-variable data table


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Create a graph for a two-variable table

Just as Excel can create a graph of a one-variable data table, it can also create a graph of a two-variable data table.

To do this, select the entire table. From the Insert menu, click Chart. Choose

XY (Scatter) and Scatter with data points connected by lines without markers.

Follow the instructions on the Chart dialog boxes to label the graph and the axes.

Tell Excel to put the graph on a new sheet. When you click Finish, Excel will display a

graph of the data table, with a different line for each of the rafting fees, using the example table from the previous slide.

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A CCP chart for a two-variable data table

This figure shows a CVP

chart for the two-

variable data table

shown in a previous

slide. Note that it creates

a separate line for each

rafting fee in the table.


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Create and use array formulas

For example, using the Excel function SUM, you could create the array formula =SUM(B3:B12*C2).

To ask Excel to treat this as an array formula, press and hold the Ctrl key and the Shift key while you press the Enter key (rather than just using the Enter key to enter the formula into the cell).

This will cause Excel to put brackets around the formula, so that it looks like this: {=SUM(B3:B12*C12)}. Don't try to type in the brackets themselves; if

you do, Excel will treat the formula as text Excel will interpret the formula

{=SUM(B3:B12*C12)} as a command to multiply each of the values in B3:B12 by the value in C12, and calculate the sum of the values.

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Create formulas using multiple arrays

Another example of an array formula using SUM is {=SUM(B3:B12*C3:C12)}.

Using this formula, Excel will multiply the first element in the first array by the first element in the second array, the second element of the first array by the second element of the second array, and so on, pair-wise through both arrays.

The two arrays must be the same size; if not, Excel returns an error message.


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Functions can display multiple values

A few of the functions in Excel can display multiple values when given

array arguments.

Some examples are TABLE and TREND.

Formulas that display several values

must be entered into a range of cells that has the same number of rows and columns as the input array arguments have.

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An example of Excel’s Trend function

This figure shows a range of values displayed by the Excel function TREND.


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Create scenarios to perform what-if analyses

To perform what-if analyses with more than two input variables, you have to use scenarios, which are:

A set of values that Excel can put into a worksheet

Created based on existing spreadsheets in Excel

You use the Scenario Manager to set up and view different scenarios.

Once you have the spread sheet with one set of values, you can create several scenarios with different values.

As you view each scenario, Excel uses the values in the scenario as input to calculate the results.

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Use the Scenario Manager dialog box

To invoke the Scenario Manager and begin creating scenarios, start the Scenario Manager by choosing Scenarios from the Tools menu.

In the Scenario Manager dialog box, click the Add button, and enter a name for the scenario.

Enter the name for your first case, such as Normal Case.

Type in the reference to each of the cells that are going to change during the scenarios.

When you click OK, the Scenario Manager will prompt you for a set of values, one for each of the cells whose references you entered as changing cells.

The original values will be entered. Since this is the original case, you can accept these values.


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The Scenario Manager dialog box

This figure shows the Scenario

Manager dialog box. Clicking

the Add button opens the next

dialog box where you specify

the name and specify the cells

that will change.

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Add additional scenarios

This figure shows the

Scenario Values dialog

box. When you click the

Add button, you will be

prompted to enter a name

and a set of values for the

next scenario.

Enter the name and replace the original values with the values for this case.

Continue in this way until you have all of the cases entered.


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View and edit scenarios

When you have the scenarios defined, you can view each one by selecting the name of the scenario you want to see in the Scenario Manager dialog box.

After you have selected the name, click Show and then Close.

Excel will display the original spreadsheet, with the values from the scenario you chose.

You can edit your scenarios from the Scenario Manager Select the scenario you want to edit, and click

Edit This will bring up a dialog box in which you

can change any of the input values You can then display the spreadsheet with the

values from the edited scenario

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Create a scenario summary report

Using the Scenario Manager, you can display a summary of the results from all of the scenarios you have created.

This data can be displayed in a summary table or a PivotTable.

To create a summary table based on the scenarios you have created, open the Scenario Manager.

In the Scenario Manager dialog box, click Summary to view the Summary dialog box.


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The Scenario Summary dialog box

This figure shows the

Scenario Summary dialog

box. Choose Scenario

summary. Then, in the Result

cells: box, enter the

references for the cells where

the results you are interested

in are.

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A Scenario Summary report

When you click OK in the Scenario Summary dialog box, a Scenario Summary,

like the one in this figure is created. Excel displays the values from all of the

changing cells, along with the values from the result cells you chose.


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Create a PivotTable report and chart

To create a Scenario PivotTable report:

Open the Scenario Manager dialog box and click Summary

From the Scenario Summary dialog box, choose Scenario PivotTable report

Excel will create a Scenario PivotTable report for all of the scenarios you have created

Excel can also chart the PivotTable. To do so:

Click on the Chart Wizard from the PivotTable tool

From the Menu bar, choose Chart and select the type of chart you want

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An example of a PivotTable report

This figure shows a

Scenario PivotTable

report.


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An example of a PivotTable chart

This figure shows a

Scenario PivotTable

Clustered Column

Chart.

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Use the PMT function to calculate the payment of a car loan or mortgage.

Use the FV function to determine the future value of a retirement account

Explain how the Goal Seek command facilitates the decision-making process

Use mixed references to vary two parameters in a table

Use the AVERAGE, MAX, MIN and COUNT function


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QUESTIONS?

ba accounting skills lecture 1

Education

function function

formulas functions

average functions

excel functions

formulas cells

statistical functions

statistical functions

false condition