This is a guest post written by Paramdeep from Pristine. Chandoo.org is partnering with Pristine to bring an excel financial modeling online training program for you.
This is Part 3 of 6 on Financial Modeling using Excel
In this tutorial we are going to learn how to build assumptions & input sheets in our excel financial model. The 6 parts of this tutorial are,
- Introduction to Financial Modeling
- Building a layout for Project Evaluation Model – Best practices
- Building Inputs and Assumptions Sheet
- Building Projections for Project Evaluation
- Modeling the Cash Flow Statement and Projections
- Putting it all together – Final Project Evaluation Model
- Join our Financial Modeling Classes
First a story: Charlie and Chocolate Factory
Would you invest in my chocolate factory? It is just a $1,000 investment (And I would give you all the chocolate that you want for free!!)! I am going to produce 10,000 chocolates per year, which costs me $ 1,000 and I would be able to sell them for $ 1,010 in the market. Would you invest your money in my project?
You can just do a back of the envelop calculation to figure out that it would take me a hundred years to return back your money (Even if you were to charge no interest).
Believe me – Most of the decisions in finance are as simple as that! 😉 Its just that the numbers are obscure and figuring out the right numbers from the client takes a lot of time!
The first step for any meaningful evaluation is assimilating the facts CORRECTLY. In the world of finance (especially investment banking, equity research, etc.), for most of the analysis work you don’t need to be PHD material or a (ironically!!) researcher. Typically the work that is required to be done (as far as modeling in concerned) is quite routine. The skill that is highly in demand is consistency and an eye for detail.
As a banker your task starts by questioning each and every number that your client is giving you and recording it correctly. For comparisons, you start with ball park (industry) numbers and do some back of the envelop calculations to ascertain the feasibility of the project or the valuation numbers.
Figuring out relevant information
In finance there are two cardinal rules:
- Cash is the king
- Cash today is more important than cash tomorrow
Whatever affects the above two is going to have an impact on the valuation of the firm. So while evaluating any business proposal (or company), you should record all the facts that affect the cash and its timing.
For example, if we were to just pick an instance from the case (download here), which reads as:
I have done a thorough analysis and found out that the minimum initial investment needed in starting such kind of factory would be around USD 400 Mn (which includes the cost of machinery which has depreciation @ 20% every year and would also have a salvage value of 20mn after 10 years) and a starting working capital of $100mn which is 40% of revenue).
Then what is important from valuation perspective is the USD 400 Mn that goes out as investment (If it is all cash). Since it goes out on day 1, it is all the more important.
The depreciation is just an accounting concept (allocation of the huge cash that you invested to different accounting periods). It should have NO impact on the valuation of the project (as it does not affect the cash and also does not affect its timing). But when accountants create P&L, they deduct the depreciation from your EBITDA. So when you start the valuation, you should put that back in the cash available (and hence to record the information on depreciation).
Layout for Assumptions & Inputs
Creating a layout which can help you record the cash and its timing in a structured manner can help you eliminate the possibility of errors in your model. Typically you can categorize the recording of information in the following heads:
-
Initial investment that would be required to start the project (Investment decision)
-
How much of money is locked in the business apart from the plant and machinery (Working capital as investment)
-
How are you going to get your cash back (The operations)
-
How are you going to mix your equity and debt and what are the costs you pay for each
Once you have recorded the relevant information, you should draw out the timing of cash as well to figure out the valuation.
Templates to download
I have created a template for you, where the subheadings are given. You have to read the business case (here) and figure out which numbers go where. I also recommend that you try to create this structure on your own (so that you get a hang of what information is to be recorded).
Download the blank assumptions sheet
Also you can download this filled template and check, if the information you recorded, matches mine or not!
Download the completed assumptions sheet.
I am just doing that for the single sheet model and recommend that you do the same for multi-sheet model as a homework problem. If you face any issue, post your excel with the exact problem and we can discuss the way to move forward.
Next Steps
In the next installment, we would see, how we can calculate the cash that the project is going to earn in each financial period. It would mean using the recorded information and finding the items that contribute to cash change (and that don’t) and also the exact financial period, when that cash would flow in. For maximum benefit from the series, please try to fill it on your own and fill in the other parts of the model as well.
Read previous part of this series – Building a Layout for Valuation – Best Practices
Join our Financial Modeling Classes
We are glad to inform that our new financial modeling & project finance modeling online class is ready for your consideration.
Please click here to learn more about the program & sign-up.
How do you prepare assumptions sheet?
We are very eager to learn from. Tell us how you go about building assumptions sheet and how you switch between various assumption scenarios. Please share using comments.
Added by Chandoo:
Thank you Paramdeep & Pristine:
Many thanks to Paramdeep and Pristine for making this happen. I am really enjoying this series and learning a lot of valuable tricks about financial modeling.
If you like this series, say thanks to Paramdeep. I am sure he can take any amount of appreciation without choking.
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Pristine is an awesome training institute for CFA, PRIMA, GARP etc. They have trained folks at HSBC, BoA etc. Chandoo.org is partnering with Pristine to bring an excel financial modeling online training program for you.
23 Responses to “Displaying Text Values in Pivot Tables without VBA”
Its possible to display up to 4 text values.
Have a look at the screen shot of an example that I had posted way back at the EHA and figure out how its done !
http://tinypic.com/r/muzywk/6
With Excel 2010 you can use Conditional Formatting to apply custom number formats which can display text. (In older versions you can only modify text color and cell background color, but not number formats.) Using CF allows for an even larger number of different display values.
[...] Display text values in Pivot Tables without VBA [...]
Hey,
Thanks, this helps. But how do you do it for multiple values where there is a huge amount of non repeating text?
@Soumya
The only way to do more than 4 values is to make the Pivot Table manually with formulas, of course then it isn't a Pivot table
You can of course do it with VBA
You may want to have a look at this description of how to do it here: http://www.clearlyandsimply.com/clearly_and_simply/2011/06/emulate-excel-pivot-tables-with-texts-in-the-value-area-using-vba.html
@Soumya
The only way to do more than 4 values is to make the Pivot Table manually with formulas, of course then it isn’t a Pivot table
You can of course do it with VBA
You may want to have a look at this description of how to do it here: http://www.clearlyandsimply.com/clearly_and_simply/2011/06/emulate-excel-pivot-tables-with-texts-in-the-value-area-using-vba.html
[...] Pivot Tables take tables of data and allow the user to summarise and consolidate the data at the same time. This is a great and very fast method of analysis but is restricted to handling mathematical functions on the value field resulting in numerical summaries. – read more [...]
[…] Read more here: Displaying Text Values in Pivot Tables without VBA […]
There is a very good way actually for handling text inside values area.
First you create a special column on the very left side and call it ID, and put unique ID (numbers only), and then create a pivot table with:
Row Labels and Column labels as you like, and in the Values labels use the unique ID number.
Move the unique ID number (copy paste) somewhere to the right and use vlookup to load the data you need using the ID as reference.
It is a bit longer way but for me it works perfectly to combine values as you like in any moment.
hope helps.
Regards,
Jon
Thank you! I finally understand pivot tables thanks to your clear, concise explanations and examples.
Good Day. This is exactly what i have been looking for. However when i try it on my pivot table or even when i try to recreate this exercise using the sample worksheet, i get this error:
"Microsoft Excel cannot use the number format you typed. Try using one of the built-in number formats."
Same thing here, Excel quite did not like the format in my PowerPivot. Any clues as to what may be going on? Thanks.
I have the same thing happening on my end. I'm running a normal pivot table on a .xlsm file.
@Danzi
What format did you use?
can you post the file ?
pls. help in table there is name, pan. amount. i have to make pivot table for example
NAME PAN AMOUNT
MR.X AAAAC1254T 500.00
MR.Y AAABR1258C
MR.A CFVDE2458T
MR.Z AAVCR12548C
MR.X AAAAC1254T
MR.Z AADCD245T
pls. help in table there is name, pan. amount. i have to make pivot table for example
NAME PAN AMOUNT
MR.X AAAAC1254T 500.00
MR.Y AAABR1258C 1000
MR.A CFVDE2458T 2000
MR.Z AAVCR12548C 5451
MR.X AAAAC1254T 45564
MR.Z AADCD245T 4500
how to get pivot tabe so i get PAN no. against Name.
I found an easy way to get text values in pivot table.
I create an other worksheet in wich each cell has a formula that copy the pivot table. The trick is that the formula does a lookup for the numbers in the pivot table.
The formula looks like that:
=IF(ISNUMBER(table!A1);VLOOKUP(table!A1;Code!$A$1:$B$65;2);IF(ISBLANK(table!A1);" ";table!A1))
Code is a worksheet where there is a liste of text /numbers correspondance.
As a bonus The new sheet is easier to format
Additional trick:
In my case, i encoded differents codeid with a power(2, codeId-1) so that summing then is equivalent to concatenate them.
1-A
2-B
4-C
8-D
yields :
5 - AC
14 - BCD
Hi
I want to ask if pivot can display dates in pivot field. As in a column i have customers and in row different items i want to know there last purchase date. anyone help in this??
Hello Guys, Need your help
I am doing some analysis of the cycle time of the product i.e how much time a product takes from manufacturing to the central warehouse.
I have batch numbers for the product and against them i have to pull out the diff. dates
Like the base date is from where the manufacturing start. So i have the batch number,against it's manuf. date. Now i have to pull out the date when it was quality released.
I have the quality released data but the data have duplicates, like i will have two dates or may be three for the same batch. So my main objective is to pull out the date which is latest among them.
BATCH NO. DATE of Mfg. DATE of Quality release
A1 12/4/2014 (HERE I HAVE TO PULL value)
Next Sheet
BATCH NO. DATE of Quality Release
A1 14/5/2014
a2 23/5/2016
A1 12/5/2014
A1 13/6/2014
From this sheet i have to pull up the latest date format of date here is dd/mm/yyy
TIA
[…] needed to present text instead of counts in a pivot table value column. Here is an excellent resource for Excel manipulation, in addition to an overview of pivot […]
This is great thank you.
Wow!!! Excellent!! It helped me a lot.
I am developing training tracking sheet for 200 employees with training completed date. Each employee will be attending 25 courses. How to indicate actual dates in pivot table value field.