Logestilla Ava February 16, 2021 Spreadsheet
I love spreadsheets. I use them for everything I can and every kind of organization. I, honestly, don‘t know what I would do without them or what how I used to cope before I first discovered them. I use a spreadsheet to balance my checkbook, to manage my business expenses, and to make ‘To Do‘ lists to plan out my days. I also use spreadsheets to manage my money and set my financial goals.
Finally, when applying discount factors, where do you intend to get your discount numbers? For a company with existing debt and equity capital you can calculate WACC and use that. For a startup company you need to figure out a risk‐adjusted cost of capital that makes sense. Usually this is not just a risk‐free rate which only the largest companies in the world have access to. It‘s probably something higher.
Second, remember that whatever can be measured can be managed. Develop a system wherein just a few look at some numbers can tell you the health of your operations. But this also depends on the soundness of the system. If someone can just fill in numbers they can induce you to think in ways that may not be desirable given the fact that you have to manage the operations.
Part of the fundamental financial analysis of any company, investment security, or business project entails the computation of cash flows. This is typically done in a cash flow template Excel spreadsheet which is pre‐built for the purpose. The reason for this is that this type of template is not a simple calculator you build on the fly with little effort. It requires a lot of thinking, organizing the spreadsheets and formulas, and some planning about how to model cash in and cash out for each potential investment. In other words, there is no cookie cutter approach because each potential investment has different profit and loss drivers.
One of the first things to consider is what kind of data you have to work with in your cash flow template Excel spreadsheet. Ideally, you‘re looking for accurate monthly data including income statement items like revenue and operating expenses and balance sheet items like equipment purchases and cash from financing activities. If you have a longer time frame you can go with quarterly periods, but annual tends to be too long. After all, how can you predict what is going to happen beyond 5 years with any accuracy unless you‘re valuing an annuity?
Working in a financial firm would entail a lot of reports to be submitted on a weekly, monthly, semi‐ monthly, quarterly and a yearly basis. All of these reports should be monitored, and most of the data where these reports come from are based from several spreadsheets that you will have to consolidate in a timely manner. To effectively have these reports updated, you can make use of a file comparison tool that can compare spreadsheet files and allow the user to make changes to it from one file to another.