Excel Skills and Functions for Business Problem Solving

Applying Fundamental Excel Skills
and Tools in Problem Solving
Functions
AVERAGE
COUNT
COUNTA
MIN
MAX
SUM
Succeeding in Business with Microsoft Excel 2013: Chapter 1
Formulas
Formulas (continued)
Calculating Totals Using

the SUM Function
Function
A predefined formula that performs calculations
Structure
Function name and open parenthesis mark
Arguments (list of inputs in a specific order,
separated by commas)
Closing parenthesis mark
Has its own syntax (specifies function name

and order of arguments)
Behaves according to its algorithm (rules
programmed into the function)

the SUM Function (continued)
SUM function
Adds a list of values and/or cell ranges
Excel has an AutoSum feature for

quick calculation


Calculating Average, Minimum,

and Maximum Values
The AVERAGE function ignores blank cells and cells with text.
Calculating the Number of Values Using

the COUNT and COUNTA Functions
The COUNT function ignores blank cells and cells with text;
the COUNTA function does not ignore text cells.
10
Analyzing Cell References When

Writing and Copying Formulas
Organize a workbook
Understand relative, absolute, and
mixed cell referencing
Write formulas with different types of
cell references
Copy formulas with different types of
cell references
Name a cell or cell range
11
Understanding Relative Cell

Referencing
Relative cell referencing
Allows use of a general formula over
and over again, but with a different set
of numbers
Can also copy formulas using the fill
handle
12
Understanding Relative Cell

Referencing (continued)
Excel automatically alters the new formula

relative to the location of the original formula.
Succeeding in Business with Microsoft Excel 2013
13
Understanding Absolute and

Mixed Cell Referencing
Absolute cell referencing
Indicates that a cell reference (both column and
row)or even a part of a cell referenceshould
remain unchanged when copying
Syntax: $ before column letter, before reference
number, or both
Mixed cell reference

A cell reference that has only one $
Common when you need to copy a formula both
down a column and across a row at the same
time
14
Understanding Absolute and Mixed

Cell Referencing (continued)
The formula entered in cell

C11 applies absolute and
mixed cell referencing.
15
Examining a Basic Worksheet

for Errors
16
Controlling the Precision of Data

Using the ROUND Function
Controlling the Precision of Data Using

the ROUND Function (continued)
18
Controlling the Precision of Data Using

the ROUND Function (continued)
19
Determining the Number of Items

That Meet Specified Criteria
COUNTIF function
Counts the number of items in a range that
meet specified criteria
=COUNTIF(range,criteria)
Range argument must be a contiguous set
of cells
Criteria argument is a test that data must
meet in order to be counted in the grouping
20
Determining the Number of Items That

Meet Specified Criteria (continued)
21

22

23

24
Determining a Total Value for

Items That Meet Specified Criteria
Use the SUMIF function to add all
values in a range that meet specified
criteria
=SUMIF(range,criteria,sum_range)
sum_range argument identifies the
corresponding cell range to sum if specified
criteria have been met in the range established
by the range argument
25
Determining a Total Value for Items That

26
Using Relational Operators to

Compare Two Values
27
Using Relational Operators to

Compare Two Values
(continued)
28
LOOKUP FUNCTIONS
Succeeding in Business with Microsoft

Excel 2013
29
Level 1 Objectives:
Performing Basic Lookups to Calculate
and Evaluate Data
Organize and evaluate data in

vertical and horizontal lookup tables
Understand the VLOOKUP and
HLOOKUP function rules
Retrieve data from a vertical lookup
table
Retrieve data from a horizontal
lookup table
30
Working with Lookup Tables

Lookup tables
Contain data that can be used to create
worksheets that list items, and then
perform calculations
Automate the process of looking up data
to use in calculating unit and total prices
31
Working with Lookup Tables

(continued)
32
Retrieving Data from a Vertical

Lookup Table
VLOOKUP function
The most effective and flexible way to
retrieve data organized in columns
Searches a specified part of a worksheet
for data, starting with the first column
=VLOOKUP(lookup_value,table_array,
col_index_num,range_lookup)
Must specify col_index_num
33

Lookup Table (continued)
34

Results of using the VLOOKUP function

35

Steps that Excel performs when the
VLOOKUP type is TRUE and key
data is sorted in ascending order:
1. Look for an exact match
2. Check the first value in the lookup table
3. Check the next value in the lookup
table
4. Check the last value in the lookup table
36

If using a type FALSE, the VLOOKUP
function looks only for an exact
match of the lookup value
Values in a lookup table need not be
sorted in ascending order
The VLOOKUP function displays #N/A
in a cell if an exact match is not
found
37

38
Retrieving Data from a

Horizontal Lookup Table
HLOOKUP function
Looks up a value by testing for a
criterion across a row
=HLOOKUP(lookup_value,table_array,
row_index_num,range_lookup)
Must specify row_index_num
39

(continued)
40

(continued)
41

(continued)
HLOOKUP type TRUE algorithm

Works in the same way as for the
VLOOKUP function, except that values
are tested across the row (instead of
down the first column)
The first row of the lookup table must be
sorted in ascending order
42

(continued)
Using the HLOOKUP function

43
Summary
VLOOKUP function
Use when the first column of the lookup table
contains the key data, and information you want to
retrieve is in a column to the right of the key data
column
HLOOKUP function
Similar to VLOOKUP, except that it retrieves data
stored in horizontal lookup tables
Use when the first row of the lookup table contains
the key data, and the information you want to
retrieve is in a row before the key data row
44
Performing More Complex Lookups Involving

Multiple Worksheets and Multidimensional Tables
Analyze and retrieve data from

multiple worksheets
Look up data in a one-row or onecolumn range
Use named range references in
formulas
Retrieve data from multidimensional
tables
45
Retrieving Data from Multiple

Worksheets
Use VLOOKUP and HLOOKUP
formulas
This is especially useful when lookup
tables are long
46

Worksheets (continued)
47

Using VLOOKUP with multiple worksheets

48

49
Looking Up Data in a One-Row

or
One-Column Range
Use the LOOKUP function
Looks up the greatest value that does
not exceed a specified value anywhere
in a table or range
Can retrieve data from a lookup table
with a vertical or horizontal orientation
Uses only a TRUE lookup type; the
column or row containing lookup values
must be in ascending order
=LOOKUP(lookup_value,lookup_vector,
result_vector)
Succeeding
in Business with Microsoft Excel 2013: Chapter 5
50

or
One-Column Range
(continued)
51

or
One-Column Range
(continued)
52
IF FUNCTIONS

Excel 2013
53
Analyzing Data Using IF Functions and

Nested Functions
Build formulas with nested functions

Write IF functions to evaluate TRUE
and FALSE values and perform
calculations
Nest functions within an IF statement
Construct a simple nested IF function
54
Introduction to IF Functions
and Nested Functions
IF function
A Boolean logical function that returns
different values (TRUE or FALSE)
depending on how the specified
condition evaluates
55
Writing Simple IF Functions

=IF(logical_test,value_if_true,value_if_fal
se)
Nested function (permitted by the IF
function)
Contains additional formulas and/or
functions as one or more of its arguments
Provides the flexibility of choosing

between two different sets of criteria,
and up to seven different levels of
logical tests
56

(continued)
57

(continued)
58

(continued)
59
Writing IF Functions with

Nested Functions
60
Constructing
a Simple Nested IF Function
Nesting IF functions one inside the other allows

you to ask a question, then another question
depending on the outcome of the first question,
and so on.
61
Constructing a Simple Nested

IF Function (continued)
An IF function can be used to
evaluate a logical test.
However, if the logical test results in
a FALSE value, another calculation is
needed.
62

63

The order of logical tests:
Must match established criteria for nonmutually exclusive criteria
Can be placed in any order for mutually
exclusive criteria
Using a specific order can save a

considerable amount of work for
testing criteria between a range of
values
64

Order of logical tests for nonmutually exclusive criteria
Order of logical tests for mutually
exclusive criteria
Order of logical tests for criteria
between a range of values
65
FINANCIAL ANALYSIS

Excel 2013
66
Functions Covered in This

Chapter
CUMIPMT
CUMPRINC
DDB
FV
IPMT
IRR
NPER
NPV
PMT
PPMT
PV
RATE
Succeeding
SLNin Business with Microsoft Excel 2013: Chapter 6
67
Objectives: Calculating Values

for Simple Financial Transactions
Understand how simple interest and
compound interest are calculated
Determine the value of a loan
payment
Analyze positive and negative cash
flows
Determine the future value and the
present value of a financial
transaction
Determine the interest rate and the
68
Understanding How Interest Is

Calculated
Factors that can affect interest:
How long do you want to borrow the money?
What level of risk is the lender assuming in
lending the money?
What are the current monetary policies of
governments that affect interest rates?
Ways interest is accounted for:

Simple interest
Compound interest
69

Calculated (continued)
Simple interest
Paid solely on the amount of the original
principal value
Simple interest = Principal * Interest
rate per time period * Number of time
periods
70

Calculated (continued)
Compound interest
Adding interest earned each period to
the principal for purposes of computing
interest for the next period
Has greater total value than simple
interest
Used by most financial institutions
71
Reviewing Alternative
Financing Options
Excels financial functions perform
calculations to help determine the
most feasible financing option
PMT
RATE
NPER
PV
FV
72
Using the PMT Function to

Determine a Loan Payment
PMT function
Finds the value of the payment per
period, assuming there are constant
payments and a constant interest rate
for the duration of the loan
=PMT(rate,nper,pv,[fv],[type])
73

(continued)
74

(continued)
Arguments of the PMT Function
rate
Interest rate per compounding period
nper
Number of compounding periods
pv
Present value
fv
Future value (compounded amount)
type
Designates when payments are made

Type 0: end of period
Type 1: beginning of period
75

(continued)
Financial functions apply the interest

rate per period and the payment per
period to the principal value over a
specified number of periods
76

(continued)
77

(continued)
Using the RATE, NPER, PV,

and FV Functions
79

and FV Functions (continued)

81

82

83

Writing Formulas for Other Loan Options
Down payment
Adjust the present value (pv) to
reflect the exact value of the loan
Balloon payment
Mortgage fees
Specify the negative future value (fv)

Adjust the pv of the loan by
subtracting the fees from the loan
amount
Recalculate the interest rate using
the same payments and loan
periods, with the new pv amount
84
Level 1 Summary
Using basic Excel functions to
calculate the elements of a loan
(PMT, RATE, NPER, PV, FV)
Understanding how these functions
affect positive and negative cash
flows of a financial institution
85
Creating a Projected Cash Flow

Estimate and Amortization Schedule
Set up an amortization table to

evaluate a loan
Create a sequence of numbers
automatically
Calculate principal and interest
payments
Calculate cumulative principal and
interest payments
Set up named ranges for a list
Calculate depreciation and taxes
86
Designing a Worksheet to
Estimate Cash Flow
Cash flow
The amount of money coming into or
out of a company each year
A combination of revenues and
expenses with the effects of required
capital investment and financing
87
Estimate Cash Flow
(continued)
Depreciation
The process by which a company

spreads the expense of an asset over its
useful life
Estimate Cash Flow
(continued)
89
Estimate Cash Flow
(continued)
90
Setting Up an Amortization
Schedule
Amortization schedule
A standard method of detailing a loan
transaction
For each specific loan period, it lists the
remaining principal and the value of the
payment apportioned to interest
expense and to paying down the
principal
Schedule (continued)
92
IPMT function
Calculates the value of the interest
payment for a specified period
=IPMT(rate,per,nper,pv,[fv],[type])
PPMT function
Calculates the value of the principal
payment for a specified period
=PPMT(rate,per,nper,pv,[fv],[type])
93
Arguments of the PPMT and IPMT Functions
rate Interest rate per period
per
nper
Period for which the interest or principal amount will

be calculated
Total number of periods in the financial transaction
pv
Value at the beginning of the financial transaction
fv
Value at the end of the financial transaction
type
Payment type of 0 or 1 (made at the beginning or

end of each period, respectively)
94
95
96
CUMIPMT function
Automatically calculates the interest values
between a start period and an end period
=CUMIPMT(rate,nper,pv,start_period,
end_period,type)
CUMPRINC function
Automatically calculates the principal values
between a start period and an end period
=CUMPRINC(rate,nper,pv,start_period,
end_period,type)
97
98
99
100
Calculating Depreciation Using

the SLN Function
Straight line depreciation method
Approximation of the actual depreciation
allowed by the tax code
Allocates the value of an asset evenly
throughout the life of the asset
=SLN(cost,salvage,life)
Cost: The initial cost of the asset
Salvage: The value at the end of depreciation
Life: The number of periods over which the
asset is depreciated
101

the SLN Function (continued)
102

the SLN Function (continued)
Alternative Depreciation Options Provided in Excel
Function
Definition
Syntax
Double-declining Computes depreciation at an

balance
accelerated rate
=DDB(cost,salvage,life,
period,[factor])
Sum of the years Depreciation is apportioned based

digits
on the declining fractional amount
of the assets life
=SYD(cost,salvage,life,
per)
Fixed-declining
balance
=DB(cost,salvage,life,
Returns the depreciation of an
period,[month])
asset for a specified period using
the fixed-declining balance method
Variable-declining
balance
Returns the depreciation of an

asset for a specified period using
the double-declining balance
method
=VDB(cost,salvage,life,
start_period,end_period,
factor,no_switch)
103
Calculating Taxes
104
Calculating Taxes (continued)
105
Evaluating the Financial Viability

of Alternative Project Options
Set up a worksheet to analyze
profitability
Calculate the net present value
Calculate the internal rate of return
Calculate the return on investment
Determine the payback period
106
Setting Up a Worksheet to
Analyze Profitability
107
Setting Up a Worksheet to
Analyze Profitability
(continued)
108
Calculating Net Present Value

Net present value (NPV)
Uses expected cash flows and applies a
minimum rate of return (hurdle rate) to
discount these cash flows into current
(present) value dollars
Enables you to see the current worth of
projected cash flows
=NPV(rate,value1,[value2],)
Has several requirements
109
Calculating Net Present Value

(continued)
110
Calculating the Internal Rate of

Return
Internal rate of return (IRR)
Considers the cash flows and discounts
them back to the present value
Calculates the rate at which the
discounted cash flows in and out are
equal
=IRR(values,[guess])
111
Calculating the Internal Rate

of Return (continued)
112
Calculating the Internal Rate

of Return (continued)
113
Calculating the Return on

Investment
Return on investment (ROI)
The sum of the cash flows, excluding
initial investment, divided by the
investment value
114
Calculating the Return on

Investment (continued)
115
Determining the Payback

Period
Payback period
The time it will take to earn sufficient
profits so the loan can be paid back
Payback year
The year in which the cumulative total
cash flow is greater than or equal to $0
116
Determining the Payback

Period (continued)
117
Evaluating the Results of the

Analysis
118
Summary
Exploring the profitability of a
financial venture by:
Calculating the NPV
Calculating the IRR
Determining the ROI
Determining the payback period
119

Excel Skills and Functions for Business Problem Solving

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Excel Skills and Functions for Business Problem Solving

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Applying Fundamental Excel Skills

and Tools in Problem Solving

Succeeding in Business with Microsoft Excel 2013: Chapter 1

Succeeding in Business with Microsoft Excel 2013: Chapter 1

Succeeding in Business with Microsoft Excel 2013: Chapter 1

Calculating Totals Using

Has its own syntax (specifies function name

Calculating Totals Using

Excel has an AutoSum feature for

Succeeding in Business with Microsoft Excel 2013: Chapter 1

Calculating Totals Using

Succeeding in Business with Microsoft Excel 2013: Chapter 1

Calculating Totals Using

Succeeding in Business with Microsoft Excel 2013: Chapter 1

Calculating Average, Minimum,

Succeeding in Business with Microsoft Excel 2013: Chapter 1

Calculating the Number of Values Using

Analyzing Cell References When

Understanding Relative Cell

Succeeding in Business with Microsoft Excel 2013: Chapter 1

Understanding Relative Cell

Excel automatically alters the new formula

Understanding Absolute and

Mixed cell reference

Understanding Absolute and Mixed

The formula entered in cell

Succeeding in Business with Microsoft Excel 2013: Chapter 1

Examining a Basic Worksheet

Succeeding in Business with Microsoft Excel 2013: Chapter 1

Controlling the Precision of Data

Succeeding in Business with Microsoft Excel 2013: Chapter 2

Controlling the Precision of Data Using

Succeeding in Business with Microsoft Excel 2013: Chapter 2

Controlling the Precision of Data Using

Succeeding in Business with Microsoft Excel 2013: Chapter 2

Determining the Number of Items

Succeeding in Business with Microsoft Excel 2013: Chapter 2

Determining the Number of Items That

Succeeding in Business with Microsoft Excel 2013: Chapter 2

Determining the Number of Items That

Succeeding in Business with Microsoft Excel 2013: Chapter 2

Determining the Number of Items That

Succeeding in Business with Microsoft Excel 2013: Chapter 2

Determining the Number of Items That

Succeeding in Business with Microsoft Excel 2013: Chapter 2

Determining a Total Value for

Succeeding in Business with Microsoft Excel 2013: Chapter 2

Determining a Total Value for Items That

Succeeding in Business with Microsoft Excel 2013: Chapter 2

Using Relational Operators to

Succeeding in Business with Microsoft Excel 2013: Chapter 4

Using Relational Operators to

Succeeding in Business with Microsoft Excel 2013: Chapter 4

Succeeding in Business with Microsoft

Organize and evaluate data in

Working with Lookup Tables

Succeeding in Business with Microsoft Excel 2013: Chapter 5

Working with Lookup Tables

Succeeding in Business with Microsoft Excel 2013: Chapter 5

Retrieving Data from a Vertical

Succeeding in Business with Microsoft Excel 2013: Chapter 5

Retrieving Data from a Vertical

Succeeding in Business with Microsoft Excel 2013: Chapter 5