The traditional theories of corporate finance have 2 viewpoints. They are,
- Shareholder value maximization is much more important than growing ones own limbs, stealing office stationary and gossiping at the water cooler.
- No one ever bothered to read the second bullet point.
But the world from now onwards is not going to be like that. I am here to enlighten the poor and downtrodden of the management who is loosing their peace, naps and valuable time in which they could have flirted with their secretaries over creating value for some samosa eating and idiot box watching shareholder.
What are my qualifications? You might ask. Well, I am the last one to crash on the desk in corporate finance classes. We can talk extensively about my unfathomable conceptual understandings in the financial domain, but lets save it for better days of your life. Coming back to where I let your mind wander, the second or alternative perspective to so-called value creation, without any further wastage of keystrokes is presented below.
Part 1:
Most of us including the least productive management wizards innately believe that we should be getting more than what we are paid. Let me help you in understand this. I have performed a survey on the laziest person I ever knew – ME. I asked myself “how much should I be paid after I pass-out†The answer came in no time. “12 lakhs per annum, stock options, free house and a car with chauffer, laptop, training in Bahamas and Paris, 3lakhs sign-on bonus, retirement benefits and of course insurance coverage.†But looking at the market situation I might get a “6 lakhs per annum, no stock options, shared accommodation with three other idiots, local train fares, training in rural Bihar and interior UP, 15,000 sign-on bonus, no retirement benefits and one year health insurance coverage†And that is the best case I am talking about. We can thus establish that,
If we are paid ‘x’ we expect more than ‘2x’
Part 2:
The other side of this not-so-romantic story. I once interacted with a HR manager, and I asked, “how much of value addition do you expect from a person whom you pay ‘x’â€. The manager replied, “we expect him to make at least double that.†Then I asked myself “If I am paid ‘x’ when I am expecting ‘2x’, how much would I produce?†I knew the answer faster than HR manager did for his question – ‘x/2’. We can safely conclude that,
If we are paid ‘x’ then we are expected to produce ‘2x’, where as we produce only ‘x/2’
The idiot’s curse or the second bullet you never cared to read:
Now lets assume the company you or me work for is making 30% profits YoY in stock market as well as real life. The new theory of value addition is,
Resign from the company, invest ‘x’ in the same company where you worked, switch on the TV and start eating samosas while the remaining not-so-intelligent managers strive to create value for you – 30% every year. In theory it takes 2.64 years to get your money back, in practice it might be even less, considering that the company just lost an employee who is making ‘x’ in return producing only ‘x/2’.
I call this ‘idiot’s curse’. This may not sound logical, but it’s certainly better than the shareholder value maximization by cutting your leg theory.
So long, see you at the idiot box then.
24 Responses
I’d suggest simply using the subtotal function and filtering the data using the Win/Loss column. You get the same results and the formula is more comprehensible.
@John
That is one option.
There are times however when you want to see the whole data table or a filtered subset and still want to produce summary reports against an unfiltered field.
Is there a particular reason why you are using a comma and the unary (–) operator for the second array in the SUMPRODUCT formula? It seems to work the same if you were to string the arrays together using the asterisk (*). The advantage is that SUMPRODUCT treats the entire string of arrays as a single array.
@Mathew
Your correct, There is no difference.
I thought it may have been easier to explain this method.
Is there a way to do this on a large set of data? As in ~100,000 rows? When I try I get an error because the formula becomes too long. It says the max length of a formula is 8,192 characters. Excel 2010.
How do I incorporate a specific text within a cell for the second array. For instance, – -(C7:C13=”Apple”)
when I chose a specific text the formula does not work.
@RB
I am not sure what is the issue as if I use the sample data in the post the following work fine
Count:
=SUMPRODUCT(SUBTOTAL(3,OFFSET(C7:C13,ROW(C7:C13)-MIN(ROW(C7:C13)),,1)), –(C7:C13=”L”))
Sum:
=SUMPRODUCT(SUBTOTAL(3,OFFSET(C7:C13,ROW(C7:C13)-MIN(ROW(C7:C13)),,1)),(C7:C13=”L”)*(D7:D13))
You may want to check that there are no leading or trailing spaces in your list of Apples
I should have given a better explanation. Heres my situation. I have a column with cells filled with names like Column 1, Column 2, Pier 1, Pier 2, etc. If the cell just contained Pier and searched for that it works. But because it has other characters in the cell its not recognizing the pier. So how can I extract specific characters of a string of text in this formula?
Hopefully this was a better explanation
Hello-
This formula works pretty well for me except that it slow down excel and prevents some of my macros from working. I was wondering if there was a way to program this in VBA so that excel isn’t always trying to recalculate it. I would like to use a push of a button to get it to run then paste in a cell.
Thanks!
I am trying to sum filtered data in a column, but would want to ignore the negative values in the column. How to go about doing this?
@Akshay
Why not just add a filter to that column to only show the values greater than zero?
The negative values are required for reporting purposes, but their effect on the total is distorting the required output. Please advise.
@Akshay
I’d suggest making a post in the Chandoo.org Forums
http://forum.chandoo.org/
Attach a sample file to simplify the task
I have this working for counting and summing, however, I have a list and for the second array, I need a criteria. That is, I’m looking for b13:b200=”01.??.??” or =left((a1,2) or something like that. These types of criteria matches do not appear to work as I get a blank as a result.
Thanks!
@Bob
As your formula b13:b200=”01.??.??” looks like you are trying to check the first day of the month of the range
What about trying Day(B13:B200)=1
Hai Experts,
i understood this formula well and working fine in MS Excel 2013
but when the same am trying to place in google Spreadsheet it shows error as
“SUMPRODUCT has mismatched range sizes. Expected row count: 1. column count: 1. Actual row count: 2014, column count: 1.” and as a result #VALUE! Appears in cell.
Can anyone please help me how would i get it done in Google Spread sheet
or is there any other formula as a substitute for this.
Thank you very much.
thanks for providing this.. but why does excel keeps on prompting Circular referencing in cell D3?
@Vivek
I don’t know
I just downloaded the file and it is working fine and not showing that error
Goto the Formulas, Calculation Options Tab and check that Calculation is set to Automatic
What version of Excel and Windows are you using ?
I know that this forum is for MS Excel, but I am trying to help someone who is working in Google Sheets. The below formula works in Excel but Google Sheets returns:
“SUMPRODUCT has mismatched range sizes. Expected row count: 1. column count: 1. Actual row count: 39000, column count: 1.” and as a result #VALUE! Appears in cell.
This is the same problem asked by Srichirin above. Does anyone know if there is a formula for Google Sheets that will replicate what MS Excel does?
=SUMPRODUCT(SUBTOTAL(3,OFFSET($C$6:$C$39500,ROW($C$6:$C$39500)-MIN(ROW($C$6:$C$39500)),,1)),- -($C$6:$C$39500=H1),($D$6:$D$39500))
Trying to find a SUMPRODUCT formula that counts the word Closed by date for the last 7 days in a filtered list.
=COUNTIF(M:M,”>”&TODAY()-7) works ok for unfiltered count Column M contains Closure dates (blank if open) and Column L is Status Open or Closed
@ Terry
Please ask the question at the Chandoo.org Forums
https://chandoo.org/forum/
Please attach a sample file to ensure a quicker more accurate answer
I used this formula and worked like a charm! But, now I’ve been requested to use it but adding not one but two criteria in the same formula. For instance the sum I was doing added negative and positive numbers. I’ve been asked to use the exact same formula but adding that only positive numbers were considered… any idea on how to do this?
How exactly do you do sum filtered cells when two criteria are need not just one?
Thank you so much brother literally I have been struggling since morning to get the sum of the filtered category, however, after reading your blog attentively i got my solution, so thanks a lot once again.