Welcome to Excel for Financial Analysis post.
Many of you might be wondering why this post? Why a separate excel post for how to use Excel for finance? What’s so special about it?
Let me answer your why’s and what’s?
Using Excel for finance professionals (financial analysis Excel)
To begin with, in finance (financial analysis in excel), you will be dealing a lot with excel (Finance Excel Spreadsheets). You will be working on huge data sets, large financial models and that too in strict deadlines. So, it’s important to know how to use excel efficiently.
By efficiency, I mean you should be able to use the right shortcuts.
Why it is important to know shortcuts is because they are not only time savers, but there is one more benefit to it which I am sure every one of us will agree.
When you are working for long hours and under pressure, imagine yourself using mouse for around 10-12 hours.
Believe me, it causes a lot of pain in every sense.
So why not do away with mouse usage by learning these extremely handy and easy to use keyboard shortcuts?
Follow a simple 80/20 rule
Now, what is this 80/20 rule? 80/20 rule tells that 80% of your results stem from 20% efforts.
Now you must be wondering why we are talking about this rule in excel.
What has this rule got to do with an excel program? Let me tell you what it means.
In excel, there must be around thousands of shortcuts.
But we are not going to go through all of them.
We are just going to focus on those shortcuts that are used most frequently in finance in general.
So coming back to our 80/20 rule, in case of excel, we will tweak this rule a bit. We will make it 95/5 .
It means 5% of the excel shortcuts are used in 95% cases.
Importance of financial analysis using Excel
We have split this program in three broad categories: - Data Manipulation & Navigation - Formatting - Formulas & Advanced Topics By Manipulation we mean how you can insert or delete rows or columns in excel, how you can hide, unhide, group, ungroup your data etc.
By navigation we mean how you can move around your workbook and worksheets more efficiently.
Formatting tells you ways to make your data more presentable.
It tells you ways to change your background color, font size, color etc.
Right now you will find it quite silly, but believe me; you require all these things when you work in investment banks, equity research and financial research.
So it is very important that you have good command over all the relevant shortcuts.
Formulas part focuses on calculations part.
In excel, there are many built-in functions available. Again, we are not going to see all those functions.
We are going to study the ones that are used most frequently in investment banking and finance.
Advance topic refers to some features like Lookup functions, Pivot Tables, Macros etc.
These are some of the features that are also used frequently in investment banking, finance and consulting.
Excel for finance
Though we I will be covering most of the shortcuts that are used frequently in investment banking, finance and consulting, I am not covering here all the shortcuts that are available in excel. (Remember 95/5 Rule).
I will focus on Excel 2003.
The reason being even today, most investment bankers use Excel 2003 and not 2007.
So, I have used Excel 2003 as the base. However, most of the shortcuts are same in Excel 2003 and 2007.
I have mentioned the differences wherever applicable. So, even if you have Excel 2007, there is nothing to worry.
Finally, the last and most important point is don’t use mouse while using Excel.
The main purpose of using Excel shortcuts is to cut down your mouse usage.
Let’s start a journey towards learning excel for finance, investment banking and consulting.
Want to learn Excel in financial analysis and modeling?