Key Excel Functions to Know
Microsoft Excel has become the standard software used for data analysis and is the gateway to becoming proficient in financial analysis. By definition, Excel is a software program created by Microsoft that uses spreadsheets to organize numbers and data with formulas and functions. The software is most popular with investment bankers and financial analysts in data entry, financial analysis, financial modeling, budgeting, and much more. Even though Excel is best described as a “data” management tool, the data that is being commonly managed is financially related.
Excel is used mainly for finance and accounting functions. As previously mentioned, many organizations use Excel to run their accounting, budgeting, and forecasting functions through spreadsheets. Some of the functions that will be highlighted in this blog are considered to be the most important. Three examples of formatting functions and formulas that will be discussed in this blog are Conditional Formatting, Custom Formatting, and Index Match.
Conditional Formatting
The first Excel function we will be talking about is Conditional Formatting. Conditional formatting can be described as a feature that allows an application of special formatting to cells that meet certain criteria. Typically conditional formatting is used to color specific cells in order to emphasize or differentiate between values within the spreadsheet. Conditional formatting has common preset formatting settings that can be helpful for a variety of cases:
Highlight Rules: Conditions that allow you to highlight the cell of a certain color
Top/Bottom Rules: Allows you to emphasize the bottom or top range of cells
Data Bars/Color Scales: Allows you to illustrate your data with a visual bar or color scale
Custom Formatting
Now, Custom Formatting is another function that is commonly used in Excel. By definition, Custom Formatting is a feature in Excel that allows you to create and add custom number formats to your data. It allows you to display data with additional descriptors without hardcoding and jeopardizing the integrity of your model. With this type of formatting, Excel will still be able to read numbers for function calculations but display them in the chosen format. The benefit of custom formatting is its ability to neatly display data with added descriptors without risking the accuracy of your calculations.
Index Match
Lastly, Index Match is a very effective tool that can be used in Excel. In order to understand Index Match you must first understand what an Index function is. An Index function in Excel is a lookup function that returns a value at any determined position in an array. The function can return individual values or entire rows and columns. It is typically used in combination with the MATCH function, where the MATCH function sends a portion to the INDEX function. This allows the formula to be dynamic rather than static. The MATCH function embedded inside of the INDEX function allows users to perform advanced lookups. The MATCH function is used to return any position in an array, whether the array is vertical or horizontal. The MATCH function embedded inside of the INDEX function can allow flexibility to retune positions for either the column or row.
To conclude, Microsoft Excel has functions and formulas that can increase efficiency at modeling, underwriting deals, saving time, and having more time for potential targets. Functions in Excel help perform mathematical, statistical, and logical operations. Here at Top Shelf Academy® (TSA), our courses teach students fundamental Excel functions and formulas that are vital to understanding real estate.
If you want to get a more in-depth understanding of the functions mentioned in this blog as well as more Excel functions and formulas, visit our TSA website.
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