Doing Cost Benefit Analysis in Excel – a case study
Imagine you are the in-charge of finance department at Hogwarts. So one fine day, while you are practicing the spells, Dumbledore walks in to your office and says, “Our electricity bills are way too high. As the muggles don’t accept wizard money, we have to find a way to reduce our power consumption.”
So you summoned the previous 12 month utility bills to examine energy consumption patterns, and pretty soon you realized that most of the electricity consumption is due to the light bulbs. You suddenly have a brilliant idea. Why not replace the light bulbs with a variety that consumes low power? A light bulb moment indeed.
Your next step is to figure out what varieties of light bulbs are out there. Fortunately this is easier than catching a snitch in a game of quidditch. A quick search revealed that there are 3 types of light bulbs:
- Regular incandescent bulbs (the kind Hogwarts currently uses)
- Compact Fluorescent Light bulbs (CFL)
- Light Emitting Diode bulbs (LED)
Now your job is to do a cost benefit analysis of these options and pick one.
Implementing Modular Spreadsheet Development – a walkthrough
This article is written by Michael Hutchens from Best Practice Modelling.
In the first article on Modular Spreadsheet Development, we got a high level overview of Modular Spreadsheet Development principles. This article discusses the practical implementation of these principles in Excel.
From my experience using Modular Spreadsheet Development over the past decade, there are three increasingly-efficient methods of implementation in Microsoft Excel:
1. Manual implementation;
2. VBA automated implementation; and
3. Commercial add-in implementation.
This article provides a comprehensive overview of each of these methods and a summary of their advantages and disadvantages.
Modular Spreadsheet Development – A Thought Revolution
This article is written by Michael Hutchens from Best Practice Modelling.
This article provides a high level overview of Modular Spreadsheet Development principles. In next part the implementation of these concepts will be discussed.
Modular Spreadsheet Development – An awesome concept
I want to share a concept with you so awesome that once you understand it you may never use Excel the same way again.
This concept, called Modular Spreadsheet Development, makes it possible to build spreadsheets exponentially faster while reducing the risk of errors and making spreadsheets much easier to understand.
This concept is not completely new, but I’m writing this article because the spreadsheet modelling world would be a much better place if it was more commonly adopted.
Calculate CAGR (Compounded Annual Growth Rate) using Excel [Formulas]
Lets talk about how we can use Excel to calculate Compounded Annual Growth Rate (CAGR for short).
What is CAGR? What does it signify?
Let us say you are the CEO of ACME Inc. You have been selling various widgets since 2009. In your latest annual report you want to tell your shareholder at what rate you have been growing ACME Inc. sales. The figure are,
- 2009 – $150 Mn
- 2010 – $125 Mn
- 2011 – $160 Mn
- 2012 – $174 Mn
- 2013 – $195 Mn
- 2014 – $210 Mn
Now, if you see the growth rates, they are all over the place. Right from -16.67% to 28%. But you want to report a single annual growth rate.
This is where CAGR (Compounded Annual Growth Rate) comes handy.
Introducing ‘Finance for Non-finance people’ training program
Dear readers & supporters of Chandoo.org,
I am very glad to announce that our brand new online course – “Finance for non-finance people” is now available for your consideration. Please take a few minutes to read this short message to understand what this program is & how it benefits you. If you are ready to join, please click here.
What is Finance for Non-finance people course?
This course aims to teach financial fundamentals & introduce you to the world financial analysis in a no-nonsense way.
We start by introducing financial analysis and the basic jargon. Then we talk about 3 important components of any company’s finances – Balance Sheet, Income Statement & Cash flow Statement.
Then we discuss about various analytical techniques like ratio analysis, valuation mechanisms, break-even analysis.
Finally we explain advanced accounting concepts like long-lived assets, depreciation, explore trend analysis and unit economics.
In a nut-shell, this course takes someone with no finance background and makes them proficient in world of finance.
Dressing Financial Statements – What Motivated Mr. Bean to Defraud Latte?
Did you know What Happened at Last Coffee Day?
Mr. Bean “dressed up” the financial statements and was caught in the fraud. But he was the CEO of Latte! So why did he commit fraud in his own company??
Any Guess?
Take a cappuccino and I will give you a hint – How was Mr. Bean’s Bonus to be decided?
Read on to know more…
Macros for Automatically Implementing Modeling Best Practices
In the first part on our Modeling Best Practices series, we learned 5 best practices to follow. This article shows how to automatically implement the best practices using macros.