Spreadsheet Models for Managers

Tidbits

This page contains a grab-bag of information about Excel and spreadsheet modeling. Items that you find here haven’t yet found a home elsewhere in the course, though someday they might. I’ve parked them here temporarily to make them available to you until they find a permanent home.

What’s on this page:

• Expressing your answer in millions
• Ranges, arrays, and matrices
• Commands and functions
• Formatting currency
• Maximum length of a user-defined name

Expressing your answer in millions

Sometimes there is confusion about what it means to express an answer in millions or thousands or whatever. It’s really very simple, but it might be confusing at first.

Let’s look at an analogy. Let’s say that you work in a shoe store, and the manager asks you to do an inventory. So you count the boxes of shoes (each of which contains one pair of shoes) and you find 403. You report to the manager that you have 403 pairs of shoes in stock. The manager asks, “And how many shoes is that?” You reply, “806.”

Since one pair of shoes contains two shoes, your answer is either 403 pairs, or 806 shoes. Both are numerically correct, but if the manager wanted the answer in pairs, you would say 403, and if she wanted the answer in units of shoes, you would say 806.

Notice that the actual numerical value you report differs in the two cases. It all depends on what the unit of measure is: one pair, or one shoe.

OK. What about millions vs. thousands?

Suppose I have $1,234,687.05 in the bank. How many millions do I have? Answer: 1.23468705

And how many thousands do I have? Answer: 1234.68705

Ranges, arrays, and matrices

A range is any collection of cells on a worksheet. When a range is rectangular, and we intend to use it, or have used it, in an array formula, we sometimes refer to that range as an array, because it’s convenient to think of it that way, based on our use of it. Similarly, when a range is rectangular, and we intend to use it, or have used it, in a matrix product, we sometimes refer to it as a matrix, for similar reasons.

But it is not appropriate, in the spreadsheet modeling context, to refer to a rectangular range as an array when we aren’t using it in array computations, or as a matrix when we aren’t using it in matrix computations. In those cases, we refer to the range as a range. And it is never appropriate, in the spreadsheet modeling context, to refer to any range as a set.

Commands and functions

Sometimes you hear worksheet functions referred to as commands. They aren’t commands. Commands are found on Excel’s menus, ribbons, or perhaps in some dialog boxes. Commands do things, like format a cell, or sort a range. Commands don’t return values — functions return values.

And sometimes you hear menu items or ribbon commands referred to as functions. They aren’t functions. They’re commands.

And sometimes you hear formulas referred to as commands. They aren’t commands. They’re formulas.

Formatting currency

In accounting and finance, it’s often customary to format currency amounts with a currency symbol, such as $, and with commas separating every third digit of the integer parts of numbers. But spreadsheet modeling is not accounting. In spreadsheet modeling, we generally don't use currency symbols or commas for amounts that represent money. The reason for this is that for modeling purposes, these characters are visual noise. When we want to make a display for reporting purposes, then we might adopt the accounting customs. But for day-to-day modeling work, we generally don’t.

However, some models have a need to show multiple currencies. In that case, you would have to show the currency symbol wherever there was ambiguity about what the denomination of a cell was. But even in these cases, we wouldn't ordinarily use the comma.

To some people this seems really strange at first, since selecting “Currency” format in Excel’s formatting command does add a currency symbol. This gives the impression that it’s standard practice to format currency with a currency symbol. It once was standard practice, and still is in many industries and companies, especially when Excel is being used for accounting and finance rather than for modeling.

But times change. Globalization is changing spreadsheet practice. For instance, to have a format called “Currency” that has a dollar symbol associated with it is rather provincial. If we could do it all over again, I think we'd probably call it "US Currency". That would make it possible to conveniently have multiple different currency formats on the same sheet: EU Currency, JP Currency, CDN Currency, etc.

Excel is showing its age.

Maximum length of a user-defined name

I’m unaware of a maximum length for defined names in Excel. However, there are some practical considerations for long names:

• The longer your names are, the more difficult it is to read your formulas.
• In Windows versions of Excel, the Name Box dropdown menu displays only the first 10-15 or so characters, by default, depending on the widths of the characters you choose. But the Name Box width is adjustable. Just drag the delineator of the right-hand edge of it to adjust it. In Excel 2011, the Name Box isn’t adjustable, but it shows entire names, up to a width of almost half the Excel window, and beyond that, it inserts an ellipsis in the middle of the name, in place of the middle string of characters, to shorten the name to about half the width of the Excel window.
• There is a limit of 8192 characters in a formula.

Last Modified: Wednesday, 27-Apr-2016 04:15:26 EDT