SPECIALISTS IN FINANCIAL MODELLING
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OK, you’ve taken the plunge – gone out on your own – told the boss to stick it and set up your own business.    You’ve left the corporate world behind and you’ll be playing by your own rules from now on!  No more management hierarchies, no boring meetings, no budgets and no getting sign-off to spend any money.  From now on, you’re your own boss and no one can tell you what to do.
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In a volatile economic environment, creating a business case for a new project or product which contains financial projections is an extremely difficult task.  Looking at historical data and extrapolating the numbers to create future projections simply doesn’t cut it anymore.
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## Should you Upgrade to Excel 2007?

The upgrade from Excel 2003 to Excel 2007 is probably one of the most significant changes for Excel users yet.  There are many new functions, most of which are an improvement to 2003 but they do take some getting used to!  As a financial modelling consultant and trainer, I’m often asked by my clients what are the advantages and disadvantage of upgrading to Excel 2007 and whether organisations should even bother.

## Five Excel Formulas to make you cringe

When creating a financial model, there are always multiple ways to write a formula which will all give you the same result.  The key is to write formulas intelligently so they are easily deciphered by yourself at a later date, or by another party reviewing your model.  As well, writing a formula one way may cause problems for your model at a future date when you start inserting rows and columns, and expecting the new data to automatically be included in calculations.

### Don’t get branded as a novice

As a financial modeller and trainer, I’ve seen formulas bad enough to make the even the most seasoned modeller shudder.  Below is a sample of the sorts of formulas that if used in your models will brand you as an inexperienced or novice Excel user.

1.  Ongoing addition of multiple cells such as =A1+B1+C1+D1+E1 instead of the sum function: =sum(A1:E1).  Time consuming and prone to error.  Need I say more?
2. Nesting a fixed number, such as a percentage:  =.75*A1 where .75 may be cost of goods sold.  Instead, use an assumption cell where the .75 can be changed easily.  This is going back to the golden rule of never entering hard-coded numbers into formulas.
3.  Creating an average by adding all the cells and dividing by a set number.   E.g. =(A1+B1+C1+D1)/4 instead of =Average(A1:D1).
4. Unnecessarily long formulas.  As far as I am concerned, the new resizable formula bar is a completely redundant feature of Excel 2007.  Your formulas should never be that long!  They should be broken down into logical steps.
5. Excessive use of the IF formula.  You can have up to seven nested IF statements within one formula but that does not mean you should!

### As simple as possible and complex as necessary

Most of these are examples of inefficient use of Excel where a more sophisticated function is available.  However, there is absolutely no point in using a fancy function just for the sake of it.  “As simple as possible and as complex as necessary” is a good rule to follow when it comes to formulas and modelling.  Remember when building your financial model you want to make your formulas as transparent and easy to follow as you can.  You also want to give the user as much flexibility and power as possible while avoiding confusion or potential for error down the road.

## Should we use Array Formulas in everyday models?

The array formula is probably one of the most powerful tools in Excel – but also the most under-used.  For some reason it is a tool that is shunned by many – even advanced users – of Excel.  But just because most people don’t know how to use them, does that mean they should be avoided in a financial model?

## Online training targets tight budgets

Plum Solutions is very pleased to announce the release of their first online course!  With more bad news regarding the economy every day, we are responding to market demand with this low priced training option.  Introduction to Financial Modelling in Excel is now available for the introductory price of \$99 plus GST.  This course is aimed at those new to financial modelling and with limited knowledge of Excel.  It is also ideal for those wanting to undertake the popular Financial Modelling intermediate course but lacking confidence in their financial or Excel experience.

The demand for the face-to-face workshops is restricted to a those participants who live near Sydney, Melbourne and Brisbane.  A lot of students travel interstate to attend a course to because it was not offered at a time or location which suits them.   ELearning is not for everyone, and some people still prefer the face-to-face method.  When participants are completing a course online, we give them as much opportunity as possible to interact with the presenter, but of course they don’t get the intensity and camaraderie that exists in a full day training workshop.

Many participants, however, find the cost savings and convenience of online delivery outweigh the disadvantages.  Being able to complete the course in their own time is invaluable, as many are not given time off work to undertake professional development courses.  With corporate budgets tightening, employees are also finding their companies reluctant to pay for their training.  With redundancies on the rise, many people are paying for their own training to improve their skills and marketability.  By offering the courses online, costs such as room hire, catering and printing of manuals are reduced and these savings can then be passed onto the participants.

By offering the courses online, Plum Solutions are expanding their product offerings as well as appealing to a new market.  Social Networks such as Linkedin and Twitter are an important part of promoting the online courses.  A “Financial Modelling in Excel” special interest group was recently set up on Linkedin and within ten days over 100 people from 28 different countries had joined the group.   Online courses open up a whole new international market as long as they are written in such a way that they are not specific to Australia and are reasonably easy to understand for those with English as a second language.

## Excel skills a key issue for professionals, survey shows

Thanks to all of the subscribers who contributed to our Financial Modelling attitudes, trends and uses survey!

Key findings were:

## Find out if you should be Salary Sacrificing with our latest Financial Model

Consistent with our commitment to provide you with the latest in financial modelling tools and resources, Plum Solutions has joined forces with boutique financial planning firm, Majella Wealth Advisers to bring you an Excel-based calculator to help you calculate how much you can benefit from salary sacrificing into your superannuation account.

## Changes between Excel 2003 and Excel 2007

#### For a more recent article, please see Excel 2016’s Top Ten Tricks

The upgrade from Microsoft Excel 2003 to Excel 2007 is probably one of the most significant changes for users yet. There are many new functions, most of which are an improvement to Excel 2003 but they do take some getting used to!

## 2008/2009 Excel Income tax calculator

How much will you save under the new 2008/2009 financial year
taxation changes? As of 1st July 2008, the tax brackets are changing,
which means we all pay less income tax! Download our handy new
Excel-based tax calculator and find out roughly how much you will save.