If you use Excel to model businesses, business processes, or business transactions, this course will change your life. You’ll learn how to create tools for yourself that will amaze even you. Unrestricted use of this material is available in two ways.
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Overview of capital expenditures | 8/7 Session Links |
One type of transaction that has a range of effects on all three financial statements is the capital transaction. That’s why we’ll focus on it as a prototype for the generic problem of handling complex transactions.
In constructing models of businesses, we often use the three financial statements as tools for understanding the consequences of our decisions. Knowing how to handle the effects of transactions with respect to the three financial statements is a critical skill. Studying the effects of capital transactions gives us a rich laboratory for examining these issues.
Last Modified: Wednesday, 27-Apr-2016 04:15:26 EDT
In the demonstration for this session, we installed a formula for depreciation that looked pretty complicated. It does save maintenance trouble, though, when the depreciation term changes for any reason. But what happens when the depreciation schedule changes in a more radical way? What if the depreciation schedule is made to be some form other than linear?
The end of this session’s demonstration gives an example of an alternative schedule, but as you can see, its formula is very different. If we’re developing a complex model with several applications of depreciation formulas, and the depreciation formulas must be changed, we would have a significant maintenance task on our hands. To avoid that kind of labor, we can define a user-defined name that contains the depreciation formula. For more about this technique, see the tip box in the narrative for this session’s demonstration.