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Excel Formulas
16
May
Excel Functions & Formulas for Finance
David Ringstrom
418
Interested in learning Excel for finance? You are in the right place. We want you to succeed in your career as a financial analyst, which includes Microsoft Excel expertise.For finance professionals, we've outlined the most important Excel functions in this guide. You should be well prepared to become a world-class financial analyst if you work your way through this list.Top 8 Excel Functions for FinanceYou need to know these 8 functions and formulas simply and clearly. You will be ready to handle any financial problems in Excel when you follow this guide. All of these formulas and functions are useful on their own, but they can also be used in combination to make them even more powerful. These combinations will be highlighted whenever possible.1: XNPVFormula: =XNPV(discount_rate, cash_flows, dates)For finance professionals, XNPV is the most useful formula in Excel. For a valuation analysis to determine a company's value, a series of cash flows must be calculated to determine its Net Present Value (NPV).By taking specific dates for cash flows into account, XNPV is much more useful and precise than regular NPV in Excel.2: XIRRFormula: =XIRR(cash flows, dates)A similar function to XNPV is XIRR, which calculates the internal rate of return for a series of cash flows based on specific dates.Since the time periods between cash flows are unlikely to all be the same, XIRR should always be used over regular IRR.3: MIRRFormula: =MIRR(cash flows, cost of borrowing, reinvestment rate)One of the most important things for finance professionals is to understand the internal rate of return in its many variations. In this formula, M stands for Modified, and it is especially useful when investing the cash from one investment in another.Suppose a private business invested its cash flow in government bonds.A high-returning business with an 18% IRR that reinvests cash in a bond at only 8% will result in a combined IRR that is considerably lower than 18%.4: PMTFormula: =PMT(rate, number of periods, present value)Finance professionals who work with real estate financial models often use this function in Excel. It is easiest to think of the formula as a mortgage payment calculator.You can calculate how much the payments will be given a number of time periods (years, months, etc.) and the total loan value (e.g., mortgage).In this way, both principal and interest are included in the total payment.5: IPMTFormula: = IPMT(rate, current period #, total # of periods, present value)A fixed debt payment includes an interest component calculated by IPMT. In conjunction with the PMT function above, this Excel function works very well. Taking the difference between PMT and IMPT in each period, we can arrive at the principal payments for each period by separating out interest payments.6: EFFECTFormula: =EFFECT(interest rate, # of periods per year)Non-annual compounding interest rates are calculated in Excel using this finance function. In particular, finance professionals involved in lending and borrowing should know about this feature in Excel.In the example above, a compounded monthly interest rate of 20.0% is actually a 21.94% annual interest rate.7: DBFormula: =DB(cost, salvage value, life/# of periods, current period)Accounting and finance professionals will find this Excel function very useful. This formula allows Excel to calculate your depreciation expense for each period without building a large Declining Balance (DB) schedule.8: RATEFormula: =RATE(# of periods, coupon payment per period, price of the bond, the face value of the bond, type)A security's Yield to Maturity can be calculated using the RATE function. If you want to calculate the average annual rate of return on bonds, you can use this calculator.Are you looking for more functions or formulas in Excel that will help you in making your daily task easy? Welcome to Excel-Accountant, a platform from where you will get all the updates about excel tools.
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20
Jun
Essential Financial Functions In Excel For Accounting Professionals
David Ringstrom
553
Summary: In this article, we'll look at four essential financial functions available in Excel. These are Future Value, Present Value, Net Present Value, and Payment.Among Investment Bankers and Financial Analysts, Microsoft Excel is the most important tool. Over 70 percent of their time was spent preparing Excel models, formulating assumptions, valuing things, doing calculations, and creating graphs.If you're a finance professional or an accountant, you should be familiar with these Excel formulas. Get familiar with four of the financial functions in Excel 2010; Present Value, Future Value, Net Present Value, and Payment.Here we go, one by one, through all the financial functions -Present Value:An expected future cash flow stream is measured by its present value (PV). You can calculate the PV fairly easily with Excel.A stream of cash flows has a present value (PV) that represents its current value.From stocks and bonds to real estate, PV analysis can value a variety of assets.Neither PMT nor FV must be omitted if FV is omitted, but both can be included.NPV is different from PV as it considers the initial investment amount. How to calculate PV in Excel?PV (Present Value)=PV(RATE, NPER, PMT, [PV], [TYPE])Future valueIn financial planning, future value (FV) represents the value of an asset in future years. FV, then, is a measure of how much a particular amount of money will be worth at a particular time.Generally, the calculation of FV is based on a projected growth rate. In an interest-bearing account, the future value of the money can be determined quickly. However, due to a volatile rate of return, it might be difficult to calculate the FV of investments in stocks, bonds, and other securities.As a result, Microsoft Excel has a built-in function that does the math for you based on your input.Future value = FV (RATE, NPER, PMT, [PV], [TYPE])RATE = Interest rate per periodNPER = Number of payment periodsPMT = The Amount paid (if omitted—it’s assumed to be 0, and FV must be included)[FV] = Future value (if omitted—it’s assumed to be 0, and PMT must be included)[TYPE] = [optional] When payments are due. 0 = end of period, 1 = beginning of period. Default is 0.Net Present ValueAn important component of corporate budgeting is the net present value (NPV). The calculation helps determine whether or not a project is financially viable.Companies can determine a potential project's financial viability by looking at net present value (NPV).It is especially beneficial when comparing more than one potential investment or project.Corporate budgeting relies on NPV.Instead of calculating NPV manually, you can use Excel.Projects with a negative NPV forecast loss. Projects with a zero NPV forecast profit.How to calculate the present value (PV) for a single cash flow?NPV = (Today’s value of expected future cash flows) – (Today’s value of invested cash)Where:R – discount or interest rateI – the cash flow periodPayment Function: PMTUsing the PMT function in Excel, you can calculate the loan's periodic payment. For example, using the PMT function, you can compute payments for a loan based on the loan amount, Number of payments, and interest rate.Payment Function =PMT (RATE, NPER, PMT, [PV], [TYPE])If you are an accountant, tax professional, or financer, Future Value, Present Value, Net Present Value, and Payment can be helpful for you. At Excel Platform, professionals can learn more about these financial functions available in Excel.Come and join us today for more amazing financial functions!
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23
Sep
Excel XLOOKUP Function: Overview With Examples
Lynn Fountain, CPA
3589
Now Office 365 comes with modern and flexible replacement of older functions like VLOOKUP, HLOOKUP, and LOOKUP that is XLOOPUP function. Excel 2019 and other previous versions won’t ever get this new function. Here we are going to learn all about function, syntax, operational parameters with examples. You are familiar with VLOOPUP, HLOOKUP, INDEX+MATCH, LOOKUP, etc. Now you are introduced to the XLOOKUP function. It allows users to search for an item in a range and return matching results. In most of the way, it is similar to VLOOKUP but offers more functionality than that, (XLOOKUP vs VLOOKUP) .XLOOKUP function allows you to find values in a dataset (vertical or horizontal) and return the matching value in some other row/column. It means it supports approximate and exact matching, wildcards (*?) for partial matches and lookups in vertical or horizontal ranges.For example, if you have an exam scoreboard of students, you can use XLOOKUP to quickly check how much a student has scored by using the name of the student. If you go deep in the discussion, then here, you will find the power of this function through more examples. How to Access XLOOKUP Function in ExcelAs, this function is only available with the Office 365 (Home, Personal, or University edition). First you need to go to File tab and then click on Account. There you find an Office Insider program, click it, and join the Office Insider Program. This way you will get access to the XLOOKUP function. XLOOKUP BenefitsIt can lookup data to the right or left of lookup values. It can return multiple results. It can handle missing values with the inbuilt IFNA. It can work with vertical and horizontal data. Without sorting the table, it can find next smaller or next larger match. You can turn on wildcard. It looks for the exact match unlike VLOOKUP (defaults to approximate).It can perform reverse search means last to first. Not just one value but it can return entire rows or columns. To apply complex criteria, it can work with arrays natively. XLOOKUP Function Syntax =XLOOKUP (lookup, lookup_array, return_array, [not_found], [match_mode], [search_mode]) XLOOKUP has three basic and three optional parameters total 61. lookup_value – That is the value we are looking up. 2. lookup_array - That is array in which you are looking for the lookup value. 3. Return_array - The range to return the value.These are required arguments, below are optional one. 1. [if_not_found] - It will return the specified value when the lookup value is not found. 2. [match_mode] - This is the match to return. Here you can specify the type of match you need. 0 = This is the default match mode. Here XLOOKUP will look for the exact match. If it is not found, then the return value will the no applicable error. -1. = An exact match is returned, but if when it is not found then the next smallest value is returned. 1. = An exact match is returned but if it is not found then the largest value is returned. 2= An exact match is returned but if special characters are used, it acts as wildcard characters in lookup_value and return partial matches. 3. [search_mode] – This is the type of search to perform by XLOOKUP. 1 – this is the default option. Search performed from first to last item in the lookup_array. -1 - here the search performed from last to first item in the lookup_array. 2. – perform a binary search from first to last item in the lookup_array being sorted in ascending order. If not, then an invalid result will be returned. -2 - perform a binary search from last to first item in the lookup_array being sorted in descending order. If not, then an invalid result will be returned.
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17
Sep
Dynamic Array Functions And Formulas - Excel 365 Features
David Ringstrom
1545
Excel Dynamic Array Formulas are a new and revolutionary office 365 update. It allows users to work with multiple values at the same time in formulas in an easy way. These dynamic Array formulas can remove duplicates, sort, filter, establish sequences and do lots more. Excel dynamic array update is not available with Excel 2016 and Excel 2019 but you get it with the Microsoft 365 subscriptions supported by Windows and Mac both. The main advantage of Dynamic Array formulas over the normal formulas is, normal formulas return the solutions in a single cell whereas Dynamic Array formulas result takes a range of cells i.e. spills which gives the dynamic effect. Now, any formula returns an array of values automatically spills into neighboring cells, without having to press Ctrl + Shift + Enter (CSE) or do any other moves. CSE formulas are complex ones, and we usually have to guess how many cells we need to copy them to. Example:Now understand the scenario with an example. Suppose you need to multiply two groups of numbers to calculate different percentages. Scenario 1 – In normal version, you get the result of the formula for the first cell only unless you place it in multiple cells and press Ctrl + Shift + Enter to make it an array formula. Scenario 2 – In this dynamic array formula, you need to type in one cell and press Enter key and you will get the whole rage filled with the results at once. Note : Populating multiple cells with a single formula is known as “ Spilling” and the populated range of cells is known as “Spill range”. Excel dynamic array functions6 new functions are introduced with the new array update. Now with the use of these functions users can solve problems in an easy manner that are hard to solve with the traditional formulas. They support the dynamic output means the result update automatically whenever there is any change in the source data. Here are the lists of functions –FILTERFilter a range of data based on criteriaRANDARRAY Returns an array of random numbersSEQUENCEReturns a list of sequential numbers in an arraySORT Sort range by specified columnSORTBY Sort range by another range or arrayUNIQUE Extract unique values from a list or rangeFILTER - This function will allow users to filter a range of data based on different criteria. Without changing the original data, it extracts the filtered record into the spill range. FILTER(array, include, [if_empty])Here in the example Filter returned the desired result and if does not match the specified criteria then show “No Results”. RANDARRAY – It returns an array of random numbers. You just need to mention number of rows and column to fill, minimum and maximum values and what need to return, whole numbers or decimal values. RANDARRAY([rows], [columns], [min], [max], [whole_number]) Here row is “6” to get result in 6 rowsColumn is “4” to get result in 4 columns.Min is 1, this is the minimum value to getMax is 100, this is the maximum value to getWhole_number is TRUE because we need integers.SEQUENCE -Function allows you to generate a list of sequential numbers in an array. Eg:1, 2, 3, 4. Here the result spilled into specified number of rows and columns automatically. SEQUENCE(rows, [columns], [start], [step]) Here we have created 5 rows tall by 3 columns wide. SORT -Function sorts the contents of a range or array either in ascending or descending order. Depending on the shape of the source array results spills to the next cells vertically or horizontally. SORT(array, [sort_index], [sort_order], [by_col]) Here Array is A2:B8sort_index is column or row to sort by 2sort_order is 1 that is ascending orderSORTBY -Function Sort range by another range or array (Sorting Conditions). SORTBY(array, by_array1, [sort_order1], [by_array2, sort_order2],…) Here Array is A2:A10by_array1 is B2:B10 – sort by valuesort_order1 -1 that is descending order. UNIQUE-Function returns list of unique values from a range of cells. Just you need to select the range and hit enter. This is faster And simpler solution. UNIQUE(array, [by_col], [exactly_once])There are additionally two more up-to-date excel functions-1. XLOOKUP - it is more powerful successor of HLOOKUP, VLOOKUP and LOOKUP that return multiple values by looking up both in columns and rows. 2. XMATCH – it is another useful successor of the MATCH function that returns a relative position of the specified item by performing vertical and horizontal lookups. Conclusion:- In the future, maybe more features will be added. But when you are using the existing one, remember to use the right syntax to get the desired result.
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09
Sep
How XLOOKUP is Different from VLOOKUP and HLOOKUP
Larry Bin, CPA
1622
XLOOKUP a new function recently launched with Microsoft Office 365 will be replacing the widely used VLOOKUP, HLOOKUP and INDEX/MATCH functions to run searches in a table of Excel data. XLOOKUP and VLOOKUP functions in Excel are similar in terms of use to find or ‘lookup’, a value from a table and list and then return a related result. But there are many things which keep them different from each other. Excel users always think that which one is a better function to use. The primary one is, XLOOKUP not supported by older versions of Excel. ( XLOOKUP Overview)How XLOOKUP different from VLOOKUP and HLOOKUP – XLOOKUP has Exact match mode by default but VLOOKUP doesn’t..VLOOKUP works from left to right, if there any value to lookup from right to left it will not work. XLOOKUP doesn’t have this limitation.lookup_array and retun_array are two separate arguments that are similar to how INDEX MATCH formulas work. But with the VLOOKUP you just have the single table_array that contains both the column to look in and the return column.HLOOKUP needs a separate function for horizontal lookup but XLOOKUP can perform horizontal lookup by referencing rows instead of columns for the lookup and return arrays.VLOOKUP formulas are not able to handle column insertions or deletions. You just need to adjust the column index number whenever you try to insert or delete column. XLOOKUP can perform searches from smallest to largest or from largest to smallest but VLOOKUP sort smallest to largest. VLOOKUP required you to input an entire data set, but XLOOKUP only requires you to reference the relevant columns or rows. This way it increases the calculation speed of the spreadsheet.XLOOKUP returns more than one value.XLOOKUP search from bottom to top but VLOOKUP doesn’t.You can set custom message if lookup value not found with XLOOKUP.
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25
Aug
Different Data Analysis Functions In Excel
Lynn Fountain, CPA
1568
Almost every big and small accounting firm uses Excel as a very powerful data analysis tool. There are at least hundreds of functions in excel which are used for data analysis. We should know how to use the right feature to get right data analysis. Here are some of the simple yet powerful features of excel to use to analyse data. Sort – This feature is used to sort excel data on one or multiple columns in ascending or descending order. Filter: if you only want to display record which meets with the certain criteria then you can use this feature. Conditional Formatting: It helps you to highlight cells with certain color, depending upon the value of cells. Charts: It is very easy to create chart to display more than a sheet full of numbers. Tables: Analyse excel data quickly and easily with the help of this feature. PivotTables: The most powerful feature of excel if PivotTable. It allows you to extract substantial data from large dataset. What-If Analysis – It allows users to try out different values for scenarios for formulas. Solver: It uses techniques from operations research to find optimal solutions for all kinds of decision problems. Analysis ToolPak : It is an add-in program that provides data analysis tool for statistical, financial, and engineering data analysis. Data Model : It is used to integrate data from multiple tables in the current workbook or from the imported data or from the data sources connected to the workbook through data connections. Formulas – Here are some list of formulas that an excel data analyst frequently uses. CONCATENATE LEN COUNTA DAYS/NETWORKDAYS SUMIFS AVERAGEIFS VLOOKUP FIND/SEARCH IFERROR COUNTIFS LEFT/RIGHT RANK MINIFS MAXIFS SUMPRODUCT
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