This blog post accounts for both today and last Friday. I have spent both days finalizing my model and working on my presentation.
I have planned my presentation to list each of the steps of my experience in my independent study, from learning about Microsoft Excel, to interviewing local business professionals, to the complicated building process. I will also be practicing my presentation today before the intensive fair begins.
Looking back at my independent study, I feel like I have accomplished a lot. I went from knowing nothing about finance to learning the basics. I learned more about business and leadership, and I learned different ways that business professionals use to make decisions for their companies. Things that I learned from my interviews with business professionals have been adapted into my model. I also learned a lot about Maumee Valley and realized there is an entire hidden side of the school in business, finance, and accounting that most people never see. I figured out the intricacies of building the model by myself, and went from knowing nothing about Microsoft Excel to having a pretty good grasp of it. I also appreciate all of the time and help that Kim Spurgeon, my sponsor, has given me over these past three weeks.
The idea for the independent study came from Mrs. Spurgeon. When I decided that I was going to take a leap of faith to do this independent study, I had no idea what I was getting myself into. I had no interest or prior experience in business or finance, but I knew that I loved Maumee Valley. I am happy to say that my independent study went well, and I learned a lot of things that I wouldn’t have otherwise learned had I not done this independent study. Although some parts of my independent study weren’t fun, there were many more parts of it that I enjoyed. I am a lot more interested in business and finance now, and I look forward to continuing to be involved in business and finance as a member of the Business Opportunities Task Force.
I am very happy with what I was able to do during my intensive independent study, and I am looking forward to showing you what I have learned at Intensive Fair, today at Maumee Valley, from 1:00 PM to 3:00 PM. Those who stop by my table will be able to actually play with my model! I appreciate the time that the readers have taken to read my blog, and I hope that all of you enjoyed the journey as much as I did!
Monday, January 25, 2016
Thursday, January 21, 2016
1-21-2016: Formulas, Calculations, More Formulas, More Calculations
I spent another day working on the same thing as yesterday: the calculator for Tuition Revenue Generated from the ELC. I made huge strides with this today.
Mrs. Spurgeon took a look at the calculator that I worked on yesterday, and she gave me a lot of suggestions and ideas to take it further. I worked today to implement her suggestions and tried to figure out how to fix the mistakes that I had made yesterday. I also incorporated more ways for the calculator to still work properly even if users mistakes, by adding more formulas.
A lot of what I have said from the past several days is difficult to understand without actually seeing it. Therefore, I’ve made up some sample data so I can actually show you parts of my calculator.
Here is a picture of the calculator’s inner workings. I used Microsoft Excel’s Trace Precedents and Trace Dependents features, which show all data coming to and from each cell on my page. Each blue line represents “travel” of data to another cell, and the arrowheads indicate where the data is going. You can see how complicated it is from the inside based on all of the arrows you see and there are still more parts of it. At the top of the screen, you’ll also see the formula for one of my cells at the bottom of the screen, D151. This is what I’m talking about when I mentioned yesterday that the formulas in the calculator are long and difficult.
Here is a picture of the calculator with the same information, but from the perspective of the user. You can see that all of the fields that user fills in (the ones that are blue and purple) lead to another place (most of them go directly inside the calculator). Everything goes back to the cell that contains the answer (not shown) that is calculated completely.
The reason why the calculator is so complicated is because it allows flexibility for the user. The blue cells that you see in the user view of the calculator have drop-down menus that allow the user to select two or more options. This is good for me, not only because it limits the answers that the user can give to the model (thereby eliminating errors in input), but also because it allows the user to choose his or her preferred method of presenting information to the model. For example, the question in cell A11 asks the user which way he or she would like to present data to the model, and the user can choose to type in values for each subsequent year (if you will the picture more closely by clicking on it, it will make sense), or the user could choose to set an increase in enrollment of a certain number of students each year (and if the user were to select this option, different text would appear, prompting the user to input the number of students to add for each year). However, everything becomes more complicated when I build in flexibility, which is why by the end of the day, I still wasn’t finished working on the calculator.
I still have five more formulas to write before I can hopefully be done with it! Another day working on the calculator tomorrow!
Mrs. Spurgeon took a look at the calculator that I worked on yesterday, and she gave me a lot of suggestions and ideas to take it further. I worked today to implement her suggestions and tried to figure out how to fix the mistakes that I had made yesterday. I also incorporated more ways for the calculator to still work properly even if users mistakes, by adding more formulas.
A lot of what I have said from the past several days is difficult to understand without actually seeing it. Therefore, I’ve made up some sample data so I can actually show you parts of my calculator.
Here is a picture of the calculator’s inner workings. I used Microsoft Excel’s Trace Precedents and Trace Dependents features, which show all data coming to and from each cell on my page. Each blue line represents “travel” of data to another cell, and the arrowheads indicate where the data is going. You can see how complicated it is from the inside based on all of the arrows you see and there are still more parts of it. At the top of the screen, you’ll also see the formula for one of my cells at the bottom of the screen, D151. This is what I’m talking about when I mentioned yesterday that the formulas in the calculator are long and difficult.
Here is a picture of the calculator with the same information, but from the perspective of the user. You can see that all of the fields that user fills in (the ones that are blue and purple) lead to another place (most of them go directly inside the calculator). Everything goes back to the cell that contains the answer (not shown) that is calculated completely.
The reason why the calculator is so complicated is because it allows flexibility for the user. The blue cells that you see in the user view of the calculator have drop-down menus that allow the user to select two or more options. This is good for me, not only because it limits the answers that the user can give to the model (thereby eliminating errors in input), but also because it allows the user to choose his or her preferred method of presenting information to the model. For example, the question in cell A11 asks the user which way he or she would like to present data to the model, and the user can choose to type in values for each subsequent year (if you will the picture more closely by clicking on it, it will make sense), or the user could choose to set an increase in enrollment of a certain number of students each year (and if the user were to select this option, different text would appear, prompting the user to input the number of students to add for each year). However, everything becomes more complicated when I build in flexibility, which is why by the end of the day, I still wasn’t finished working on the calculator.
I still have five more formulas to write before I can hopefully be done with it! Another day working on the calculator tomorrow!
Wednesday, January 20, 2016
1-20-2016: User-Friendly Interface, but Not User-Friendly for Me
Today, my assignment was to take what I had learned yesterday and try to figure out how to make a user-friendly interface for my model. I spent the whole day doing this, as it was a big leap into the unknown.
As stated in yesterday’s post, my goal for today was to figure out how to actually create the interface. No step of today’s building process was user-friendly for me. Every step required me to use data validation tools, advanced functions, and more complicated formulas to build what I wanted.
I spent most of the morning trying to figure out dependent drop-down menus. As discussed yesterday, these drop-down menus allow users to fill in an answer to a question. I had to do some research to find out how to do exactly as I wanted. Eventually, this made sense, and then I began combining these drop-down menus with formulas.
I also went searching for functions that I would need to use in conjunction with these drop-down menus. Although I went through a course on Excel formulas and functions, the online videos weren’t enough, and I had to do some searching on my own. I learned about some logical functions, such as AND, IF, NOT, and OR. I tried to see if any of these would help me in creating the user-friendly features; I eventually included IF and OR in some of my formulas. These functions are very helpful and can give the user different results depending on what information is inputted into the model.
I built the interface with a lot of trial and error. It wasn’t easy trying to jump into something that I didn’t know about (and something that even Mrs. Spurgeon didn’t completely know about). By the end of the day, I had finished a part of the new interface.
Writing the formulas was probably the most difficult part of today’s work. Microsoft Excel requires functions and their arguments to be inputted in only one form. I frequently ran into syntax errors, in which I would have my formula that I had thought through and worked hard on. I would then tell Microsoft Excel to calculate what I had written, but Excel would get nothing. I would then have to go back into the formula and find the one or two hard-to-find mistakes and fix them. But sometimes, I wasn’t able to find an error even though I was told that one existed. All of the time that I spent searching, experimenting, and writing formulas ended up leaving me frustrated by the end of the day. And after that, I realized in the late afternoon that I had made a mistake in one part of the new interface, and that I would need to figure out how to fix it tomorrow.
Since that’s really all I have to talk about for today, I thought I would do a quick reflection on my independent study goals.
In my proposal for my independent study advisor, I indicated that my goals were to do research on business opportunities and create the financial model for the Business Opportunities Task Force. I have done research on business opportunities and potential expansions. I have done this by talking to Mrs. Spurgeon, learning as I went, in addition to having met with business professionals in the Toledo area. I can prove I have done this from the blog posts I have written. My model is also completed, and the only thing that I’m doing now is taking a step further by attempting to create a user interface that is easier to use. Because I’ve already met all the goals as outlined in my proposal, we have decided that the last days of my independent study would be dedicated to cleaning and simplifying the model, and I have already begun to do this yesterday.
Enough for today; off to more work tomorrow…
As stated in yesterday’s post, my goal for today was to figure out how to actually create the interface. No step of today’s building process was user-friendly for me. Every step required me to use data validation tools, advanced functions, and more complicated formulas to build what I wanted.
I spent most of the morning trying to figure out dependent drop-down menus. As discussed yesterday, these drop-down menus allow users to fill in an answer to a question. I had to do some research to find out how to do exactly as I wanted. Eventually, this made sense, and then I began combining these drop-down menus with formulas.
I also went searching for functions that I would need to use in conjunction with these drop-down menus. Although I went through a course on Excel formulas and functions, the online videos weren’t enough, and I had to do some searching on my own. I learned about some logical functions, such as AND, IF, NOT, and OR. I tried to see if any of these would help me in creating the user-friendly features; I eventually included IF and OR in some of my formulas. These functions are very helpful and can give the user different results depending on what information is inputted into the model.
I built the interface with a lot of trial and error. It wasn’t easy trying to jump into something that I didn’t know about (and something that even Mrs. Spurgeon didn’t completely know about). By the end of the day, I had finished a part of the new interface.
Writing the formulas was probably the most difficult part of today’s work. Microsoft Excel requires functions and their arguments to be inputted in only one form. I frequently ran into syntax errors, in which I would have my formula that I had thought through and worked hard on. I would then tell Microsoft Excel to calculate what I had written, but Excel would get nothing. I would then have to go back into the formula and find the one or two hard-to-find mistakes and fix them. But sometimes, I wasn’t able to find an error even though I was told that one existed. All of the time that I spent searching, experimenting, and writing formulas ended up leaving me frustrated by the end of the day. And after that, I realized in the late afternoon that I had made a mistake in one part of the new interface, and that I would need to figure out how to fix it tomorrow.
Since that’s really all I have to talk about for today, I thought I would do a quick reflection on my independent study goals.
In my proposal for my independent study advisor, I indicated that my goals were to do research on business opportunities and create the financial model for the Business Opportunities Task Force. I have done research on business opportunities and potential expansions. I have done this by talking to Mrs. Spurgeon, learning as I went, in addition to having met with business professionals in the Toledo area. I can prove I have done this from the blog posts I have written. My model is also completed, and the only thing that I’m doing now is taking a step further by attempting to create a user interface that is easier to use. Because I’ve already met all the goals as outlined in my proposal, we have decided that the last days of my independent study would be dedicated to cleaning and simplifying the model, and I have already begun to do this yesterday.
Enough for today; off to more work tomorrow…
Tuesday, January 19, 2016
1-19-2016: Model Building, Moving Forward
Today, I met with Mrs. Spurgeon on campus to discuss my model as it is and how to take it a step further.
My model right now makes sense, and anyone who knows basic finance and has background knowledge can easily use my model. But there’s an issue: the goal is for the model to be as user-friendly as possible, but what about it being easy enough for someone who has no basic knowledge about finance? For instance, I’ve learned a lot about finance since I began my independent study, and if I didn’t have the knowledge that I have now, I would have no idea how to use such a model that I have created. Today, we discussed how to make the model even easier to use than it is now.
We discussed two ways of doing this: either creating drop-down menus directly within the model, or creating a simplified table in which information can be added. I’ll use the example of revenue earned from tuition in an expansion to illustrate both methods of simplifying the model.
If I were to add a series of drop-down menus and fill-in boxes, the user would open the menu or fill in a numerical answer into a box to answer the question. For example, a question may ask, “how many students do you expect?” The user would fill in the box with the expected number of students. The next question would ask the expected change in number of students over a ten year period. A subsequent question may even ask the amount or percentage of tuition increase per year. After the user answers all of these questions, the model uses these answers, along with the average net tuition paid per student, to calculate the amount of tuition generated over the next ten years. This allows the user to do even less work in learning how to use the model. The end result for this is that the model would be able to easily calculate the amount of tuition revenue generated, just by answering these questions. This result gets inputted into the main portion of my model which calculates financial metrics and ratios.
The other option is to add another table to my model that would prompt users to fill in data for amount of expected students, percent increase in tuition, and the current net tuition per student. This is the same as doing what I described above, as all of the same questions are being asked and users are giving the model data; they are just two different, but equally good ways of doing this. Once again, the end result would be the ability to easily find the total amount of revenue earned from tuition, just by filling in a couple boxes with information.
I would be doing this so that the model can calculate other important information pertinent to an expansion, such as the cost of teachers’ salaries.
Besides talking to Mrs. Spurgeon about my model, I also spent some of my day cleaning it up and doing some more experimenting. There are some other parts of my model that need to be cleaned up and refined. Hopefully, I will be able to send a draft of my model to the Business Opportunities Task Force by the end of the week for feedback, so I can present them my completed, final draft model at the next meeting.
By the end of the day, I understood what I would be working on, and I will be figuring out the details of this tomorrow. I know the point of what I’m doing, but I will have to figure out how to work out how to actually create the drop-down boxes by myself. So this is my assignment for tomorrow!
My model right now makes sense, and anyone who knows basic finance and has background knowledge can easily use my model. But there’s an issue: the goal is for the model to be as user-friendly as possible, but what about it being easy enough for someone who has no basic knowledge about finance? For instance, I’ve learned a lot about finance since I began my independent study, and if I didn’t have the knowledge that I have now, I would have no idea how to use such a model that I have created. Today, we discussed how to make the model even easier to use than it is now.
We discussed two ways of doing this: either creating drop-down menus directly within the model, or creating a simplified table in which information can be added. I’ll use the example of revenue earned from tuition in an expansion to illustrate both methods of simplifying the model.
If I were to add a series of drop-down menus and fill-in boxes, the user would open the menu or fill in a numerical answer into a box to answer the question. For example, a question may ask, “how many students do you expect?” The user would fill in the box with the expected number of students. The next question would ask the expected change in number of students over a ten year period. A subsequent question may even ask the amount or percentage of tuition increase per year. After the user answers all of these questions, the model uses these answers, along with the average net tuition paid per student, to calculate the amount of tuition generated over the next ten years. This allows the user to do even less work in learning how to use the model. The end result for this is that the model would be able to easily calculate the amount of tuition revenue generated, just by answering these questions. This result gets inputted into the main portion of my model which calculates financial metrics and ratios.
The other option is to add another table to my model that would prompt users to fill in data for amount of expected students, percent increase in tuition, and the current net tuition per student. This is the same as doing what I described above, as all of the same questions are being asked and users are giving the model data; they are just two different, but equally good ways of doing this. Once again, the end result would be the ability to easily find the total amount of revenue earned from tuition, just by filling in a couple boxes with information.
I would be doing this so that the model can calculate other important information pertinent to an expansion, such as the cost of teachers’ salaries.
Besides talking to Mrs. Spurgeon about my model, I also spent some of my day cleaning it up and doing some more experimenting. There are some other parts of my model that need to be cleaned up and refined. Hopefully, I will be able to send a draft of my model to the Business Opportunities Task Force by the end of the week for feedback, so I can present them my completed, final draft model at the next meeting.
By the end of the day, I understood what I would be working on, and I will be figuring out the details of this tomorrow. I know the point of what I’m doing, but I will have to figure out how to work out how to actually create the drop-down boxes by myself. So this is my assignment for tomorrow!
Friday, January 15, 2016
1-15-2016: Mark Frasco, COACT
This afternoon, I met with Mark Frasco, president of COACT. COACT provides business consulting and marketing services to a wide variety of companies. Mr. Frasco is a parent of a Maumee Valley alumnus and a former member of Maumee Valley’s Board of Trustees. Mrs. Spurgeon thought that meeting with Mr. Frasco would be a good idea so that I could see the perspective of an entrepreneur and marketing professional in terms of looking at and evaluating business opportunities.
Of course, with each business professional whom I interviewed during this independent study, I asked which three financial metrics are most important to each person when considering a business opportunity. Mr. Frasco said that he primarily uses just two metrics, which are profit and amount of revenue per dollar spent.
The biggest thing that I took away from talking to Mr. Frasco was the importance of core values and mission statements of a company or an organization. When I asked him how he maintains the integrity of his company in business opportunities, he says that he always goes back to COACT’s mission statement. I could see how important this was to him because it was framed and hanging on the wall of his office. He showed it to me, saying that he is always thinking about the mission statement, from when he leaves for work every day, to making a deal, to making decisions. As a leader in his company, he said that if he and other company leaders truly believe the mission statement, others will follow their lead and also believe the mission statement. He said that as long as the leaders of an organization stick to their mission statement, everything will be OK and the organization’s integrity will be upheld. I will be thinking about this when attending future Business Opportunities Task Force meetings.
Mr. Frasco also showed me a model that has to do with overcoming change. His model is a simple equation:
DVF > R
R = resistance to change
D = shared dissatisfaction among leaders of the organization
V = shared vision among leaders of the organization
F = first steps towards overcoming a change
The idea is that one cannot overcome resistance to change without a shared dissatisfaction, a shared vision, and first steps toward making a change. All three parts of the left side of the equation must be present. If one of them is not there, an organization will never be able to overcome the resistance to change, even two of the other parts are, because a zero substituted for either D, V, or F makes the entire left side of the equation equal to zero.
All of my interviews with Toledo area business professionals were very interesting and left me thinking. I am looking forward to finishing my model next week!
Of course, with each business professional whom I interviewed during this independent study, I asked which three financial metrics are most important to each person when considering a business opportunity. Mr. Frasco said that he primarily uses just two metrics, which are profit and amount of revenue per dollar spent.
The biggest thing that I took away from talking to Mr. Frasco was the importance of core values and mission statements of a company or an organization. When I asked him how he maintains the integrity of his company in business opportunities, he says that he always goes back to COACT’s mission statement. I could see how important this was to him because it was framed and hanging on the wall of his office. He showed it to me, saying that he is always thinking about the mission statement, from when he leaves for work every day, to making a deal, to making decisions. As a leader in his company, he said that if he and other company leaders truly believe the mission statement, others will follow their lead and also believe the mission statement. He said that as long as the leaders of an organization stick to their mission statement, everything will be OK and the organization’s integrity will be upheld. I will be thinking about this when attending future Business Opportunities Task Force meetings.
Mr. Frasco also showed me a model that has to do with overcoming change. His model is a simple equation:
DVF > R
R = resistance to change
D = shared dissatisfaction among leaders of the organization
V = shared vision among leaders of the organization
F = first steps towards overcoming a change
The idea is that one cannot overcome resistance to change without a shared dissatisfaction, a shared vision, and first steps toward making a change. All three parts of the left side of the equation must be present. If one of them is not there, an organization will never be able to overcome the resistance to change, even two of the other parts are, because a zero substituted for either D, V, or F makes the entire left side of the equation equal to zero.
All of my interviews with Toledo area business professionals were very interesting and left me thinking. I am looking forward to finishing my model next week!
1-15-2016: Fred Deichert, Midwest Terminals
This morning, I met with Fred Deichert, chief financial officer of Midwest Terminals. Midwest Terminals, founded in 1999, is a company based in the Toledo area that loads and unloads cargo. The transportation modes in which the company specializes are rail, vessel, truck, and pipeline. Mr. Deichert is a parent of two Maumee Valley alumni, a member of Maumee Valley’s Board of Trustees, and past president of the board. Mrs. Spurgeon thought it would be good if I met with him, as he is a successful business professional who is connected to Maumee Valley.
The first question I asked was which three financial metrics are most important to him when considering a business opportunity. For him, these are cash flow, cost of capital, and size of the project.
However, Mr. Deichert says that there are also nonfinancial aspects of a business opportunity to think about; his three most important ones are the proximity from home, the competencies needed to successfully deliver the project, and the time of year. In regards to the competencies needed to successfully deliver the project, he gave the example of Magic Wok deciding that it wanted to bring in ingredients for its restaurants by vessel. He says that this would be difficult because of how perishable goods are being transported. Midwest Terminals has no prior experience transporting perishable goods or knowledge of food safety, so the company would have to think very hard about these challenges in deciding if they wanted to move forward with this business opportunity.
His point about being close to home relates to what the Business Opportunities Task Force was discussing at Tuesday’s meeting. Mr. Deichert’s reason for a business opportunity close enough to home is so that the business opportunity could be effectively managed. Our task force discussed the implications of a Maumee Valley expansion outside of the country, which could be geographically very far. To me, it seems like such an expansion for Maumee Valley would require someone from the school to directly oversee day-to-day operations in order for the expansion to be everything we want. Mr. Deichert seems to feel the same about business and what he does with his work. Obviously, it is much easier to manage something when it’s closer to home, which is why it is one of his most important nonfinancial aspects of a business opportunity.
When I asked him how he makes sure that a business opportunity is consistent with his company’s long-term goals, he had a very simple philosophy: if it meets the three most important financial and nonfinancial aspects discussed above, then it would probably be OK. He said that the company will occasionally try something new, but he and his colleagues will take a look at the opportunity very closely before moving forward with it.
Overall, I learned a lot from interviewing Mr. Deichert today and I hope to incorporate his thoughts into my model in one way or another. It was very interesting to see the similarities and differences in perspectives of what a controller would do (see blog post 1-6-2016: Amy Yustick, Dana Holding Corporation) and what a chief financial officer would do when evaluating business opportunities.
The first question I asked was which three financial metrics are most important to him when considering a business opportunity. For him, these are cash flow, cost of capital, and size of the project.
However, Mr. Deichert says that there are also nonfinancial aspects of a business opportunity to think about; his three most important ones are the proximity from home, the competencies needed to successfully deliver the project, and the time of year. In regards to the competencies needed to successfully deliver the project, he gave the example of Magic Wok deciding that it wanted to bring in ingredients for its restaurants by vessel. He says that this would be difficult because of how perishable goods are being transported. Midwest Terminals has no prior experience transporting perishable goods or knowledge of food safety, so the company would have to think very hard about these challenges in deciding if they wanted to move forward with this business opportunity.
His point about being close to home relates to what the Business Opportunities Task Force was discussing at Tuesday’s meeting. Mr. Deichert’s reason for a business opportunity close enough to home is so that the business opportunity could be effectively managed. Our task force discussed the implications of a Maumee Valley expansion outside of the country, which could be geographically very far. To me, it seems like such an expansion for Maumee Valley would require someone from the school to directly oversee day-to-day operations in order for the expansion to be everything we want. Mr. Deichert seems to feel the same about business and what he does with his work. Obviously, it is much easier to manage something when it’s closer to home, which is why it is one of his most important nonfinancial aspects of a business opportunity.
When I asked him how he makes sure that a business opportunity is consistent with his company’s long-term goals, he had a very simple philosophy: if it meets the three most important financial and nonfinancial aspects discussed above, then it would probably be OK. He said that the company will occasionally try something new, but he and his colleagues will take a look at the opportunity very closely before moving forward with it.
Overall, I learned a lot from interviewing Mr. Deichert today and I hope to incorporate his thoughts into my model in one way or another. It was very interesting to see the similarities and differences in perspectives of what a controller would do (see blog post 1-6-2016: Amy Yustick, Dana Holding Corporation) and what a chief financial officer would do when evaluating business opportunities.
Thursday, January 14, 2016
1-14-2016: Expanding the Model
The first step of my model was to create a balance sheet, in addition to linking data to formulas to instantaneously calculate financial ratios. After finishing this first step of my model yesterday, I worked today on expanding the model. This involved adding more to the model that I already have.
To review the basics of my model, the user fills in specified boxes with specific data, and all inputted data is used to calculate financial ratios and other financial metrics on a different page. But what if we projected the next ten years and wanted to also include data about this on the spreadsheet? This is where things get a little more complicated, and I had to expand upon everything that I had already created. The following picture shows the spreadsheet in which the user inputs data (the user fills in as many purple cells as possible that match the labels on the left):
It seems simple: I had a table with a column for data, so all I would have to do is add nine more columns, so that there would be ten empty columns in which data could be entered, with one column for each year of data. However, when trying to add columns to an Excel table, the formulas won’t always do what one would them to. I had to spend a lot of time changing formulas and switching around how they would calculate the data. This basically meant going back through all of the work that I did yesterday and changing all of the formulas so that they would work for a different method of calculating data.
Besides adding columns and fixing all of the formulas on my data entry sheet, I proofread all of my formulas on the spreadsheet that gives the results and improved the layout of the spreadsheet. Otherwise, there isn’t anything else to explain about what I did today, as most of today’s work was repetitive.
Here is a picture of the results page that is given after data has been inputted (there are no actual results shown here because the first page does not have any inputted data):
Other things that still need to be added to the model are the net present value and internal rate of return. After doing a bit of research, I still couldn’t figure out how to use these functions in Microsoft Excel. I will be asking Mrs. Spurgeon to help me with this the next time that I work on the model. Additionally, we will most likely condense the model somewhat to make the model even easier to use and understand.
Tomorrow, I will be taking a break from modeling to interview business professionals. I will resume working on my model on Tuesday.
Just to be clear, my model is not done yet; rather, it’s almost ready to be taken a step further!
To review the basics of my model, the user fills in specified boxes with specific data, and all inputted data is used to calculate financial ratios and other financial metrics on a different page. But what if we projected the next ten years and wanted to also include data about this on the spreadsheet? This is where things get a little more complicated, and I had to expand upon everything that I had already created. The following picture shows the spreadsheet in which the user inputs data (the user fills in as many purple cells as possible that match the labels on the left):
Click picture to enlarge
It seems simple: I had a table with a column for data, so all I would have to do is add nine more columns, so that there would be ten empty columns in which data could be entered, with one column for each year of data. However, when trying to add columns to an Excel table, the formulas won’t always do what one would them to. I had to spend a lot of time changing formulas and switching around how they would calculate the data. This basically meant going back through all of the work that I did yesterday and changing all of the formulas so that they would work for a different method of calculating data.
Besides adding columns and fixing all of the formulas on my data entry sheet, I proofread all of my formulas on the spreadsheet that gives the results and improved the layout of the spreadsheet. Otherwise, there isn’t anything else to explain about what I did today, as most of today’s work was repetitive.
Here is a picture of the results page that is given after data has been inputted (there are no actual results shown here because the first page does not have any inputted data):
Click picture to enlarge
Other things that still need to be added to the model are the net present value and internal rate of return. After doing a bit of research, I still couldn’t figure out how to use these functions in Microsoft Excel. I will be asking Mrs. Spurgeon to help me with this the next time that I work on the model. Additionally, we will most likely condense the model somewhat to make the model even easier to use and understand.
Tomorrow, I will be taking a break from modeling to interview business professionals. I will resume working on my model on Tuesday.
Just to be clear, my model is not done yet; rather, it’s almost ready to be taken a step further!
Wednesday, January 13, 2016
1-13-2016: Business Opportunities Task Force Meeting
Yesterday evening, I attended the Business Opportunities Task Force meeting at school. The Business Opportunities Task Force consists of members of the Maumee Valley community, including faculty, staff, students, parents, and board members. The purpose of the task force is to find new sources of revenue to help support the school’s increasing costs. This is because the school needs more funds in order to give pay raises to our amazing staff and faculty. The problem with this is that the administration would like to increase pay at a higher rate than we can raise tuition. I am one of the two students with the privilege of being on the task force, and although I can’t speak about everything, I will speak in general terms about last night’s meeting.
The meeting yesterday primarily consisted of discussion of such business opportunities to create revenue. At a previous meeting, some business opportunities were already discussed, and individuals who had volunteered to research such potential business opportunities reported their thoughts and findings back to the task force.
The idea that we discussed about most at yesterday’s meeting was the idea of opening a satellite Maumee Valley campus in a foreign country. An example of an independent school that has done this is the Barstow School in Kansas City, Missouri. We spent quite a bit of time discussing the implications of an expansion in any foreign country. Firstly, it would be a very risky investment, and would require a risk analysis before the task force decides to move forward. Secondly, it would be very difficult to recreate the culture of Maumee Valley in an expansion located outside of the United States. There are so many experiences and traditions about Maumee Valley that make us Maumee Valley, like preschool concerts, the little/big buddy program in the Upper Intermediate, and Thanksgiving assembly, just to name a few. It would be difficult to transfer the culture of Maumee Valley to somewhere else, especially to a country with a different culture from ours. Thirdly, we would need to find out how we would be able to retain control of our school. It would do us no good if we invested money in any sort of expansion but can’t collect revenue or retain control over some day-to-day operations at the satellite campus. All of these implications led to a question: why are we so interested in a faraway satellite campus? After all, we spent a good portion of the meeting discussing these three main implications. These points of concern raise several questions that we will need to seriously discuss if we decide to continue with such an expansion.
One of the ideas that had not yet been researched in much detail was opening a makerspace at Maumee Valley for public use. Someone had brought up this idea sometime earlier, and although it sounds quite expensive (and also needs to take local demand into consideration, as well as a price we can charge individuals for using it), I figured that I would volunteer to look into the possibilities for this type of business opportunity. As team leader of the Maumee Valley Robotics Team, I know how to do some research as to some of the equipment costs, as well as individuals whom I could talk to in order to see what equipment would be wanted most in a makerspace. I will be doing just some basic research for now, and I intend to report my findings at the next meeting.
The next Business Opportunities Task Force meeting is after the intensive. My model will have been completed by then, and I will be explaining the model to the task force. I will also report back what I find about the logistics and costs of building a makerspace at the next meeting. As I have explained earlier, creating a financial model is the final project of my independent study, and the purpose of the model will be to allow the business opportunities task force to evaluate the feasibility of any possible business opportunity.
Today, my focus will be to continue building the model as I did during the day, yesterday. I will keep adding more formulas and tables with information, and this isn’t very different than what I did yesterday.
The meeting yesterday primarily consisted of discussion of such business opportunities to create revenue. At a previous meeting, some business opportunities were already discussed, and individuals who had volunteered to research such potential business opportunities reported their thoughts and findings back to the task force.
The idea that we discussed about most at yesterday’s meeting was the idea of opening a satellite Maumee Valley campus in a foreign country. An example of an independent school that has done this is the Barstow School in Kansas City, Missouri. We spent quite a bit of time discussing the implications of an expansion in any foreign country. Firstly, it would be a very risky investment, and would require a risk analysis before the task force decides to move forward. Secondly, it would be very difficult to recreate the culture of Maumee Valley in an expansion located outside of the United States. There are so many experiences and traditions about Maumee Valley that make us Maumee Valley, like preschool concerts, the little/big buddy program in the Upper Intermediate, and Thanksgiving assembly, just to name a few. It would be difficult to transfer the culture of Maumee Valley to somewhere else, especially to a country with a different culture from ours. Thirdly, we would need to find out how we would be able to retain control of our school. It would do us no good if we invested money in any sort of expansion but can’t collect revenue or retain control over some day-to-day operations at the satellite campus. All of these implications led to a question: why are we so interested in a faraway satellite campus? After all, we spent a good portion of the meeting discussing these three main implications. These points of concern raise several questions that we will need to seriously discuss if we decide to continue with such an expansion.
One of the ideas that had not yet been researched in much detail was opening a makerspace at Maumee Valley for public use. Someone had brought up this idea sometime earlier, and although it sounds quite expensive (and also needs to take local demand into consideration, as well as a price we can charge individuals for using it), I figured that I would volunteer to look into the possibilities for this type of business opportunity. As team leader of the Maumee Valley Robotics Team, I know how to do some research as to some of the equipment costs, as well as individuals whom I could talk to in order to see what equipment would be wanted most in a makerspace. I will be doing just some basic research for now, and I intend to report my findings at the next meeting.
The next Business Opportunities Task Force meeting is after the intensive. My model will have been completed by then, and I will be explaining the model to the task force. I will also report back what I find about the logistics and costs of building a makerspace at the next meeting. As I have explained earlier, creating a financial model is the final project of my independent study, and the purpose of the model will be to allow the business opportunities task force to evaluate the feasibility of any possible business opportunity.
Today, my focus will be to continue building the model as I did during the day, yesterday. I will keep adding more formulas and tables with information, and this isn’t very different than what I did yesterday.
Tuesday, January 12, 2016
1-12-2016: Beginning to Build
Today was the day where several days’ worth of learning all came together!
I began the day by briefly reviewing financial ratios with Mrs. Spurgeon. We talked again about which financial ratios would be the most important, and even added new terminology and ratios to the list. This helped me make sure that I knew the basics, and would be ready to apply them for actually building the model.
I went back to the sources of income and expense that Mrs. Spurgeon and I had brainstormed on the first day of the independent study. These sources of income and expense are very important because without this information, I can’t calculate an operating gain/loss (also called net income) that I can use in my model. I also did some research (along with talking to Mrs. Spurgeon) about what data would be necessary for other important financial data categories so that I could know what other data would be important in order to make calculations. For example, I had to research what goes under the financial term “total liabilities,” which includes everything from accounts payable to long term debt and even loans payable.
I then began to build my model by first defining the parts of a financial ratio in my spreadsheet so that I could later use it to directly calculate that ratio within the spreadsheet. For example, the current ratio is defined by dividing current assets by current liabilities, so in order to find the current ratio, I first needed to find amount of current assets and current liabilities. But with the exception of accountants and other professionals who keep close tabs on financial information within an organization, few people can quickly find the amount of current assets and current liabilities of their company or organization. I needed to make the model as easy to use as possible, so I created formulas to calculate the total amount of current assets and total amount of current liabilities. As it works right now, the model that I’m building instructs the user to input data that is linked to calculating the amount of current assets and current liabilities; some examples of data that are needed include the amounts of all accounts receivable, cash, any money due from the government, all accounts payable, and accrued liabilities. If the user can simply find these data and input them into the model, the spreadsheet will calculate the current ratio for the user by using the information received to calculate the current assets and divide them by the current liabilities. In general, the intention when building a model is to make it easy to use, allowing users to quickly get information from the data they have without the need to do complicated calculations. All of the calculations are determined by formulas, which link cells together and can almost instantly find results based on the data it is given.
Additionally, I organized all these subparts of the financial ratios into the format of a balance sheet, making each of the subparts easy to find and the model easier to use. I could have created an interface that tells the user to input data all over the place on a spreadsheet, but that would be silly, given that most users are familiar with the look and feel of a balance sheet. Finally, I did more research in order to make sure that I wasn’t missing any subpart that should be included in any of the sections of the balance sheet.
Here is a more detailed breakdown of what I learned in the days leading up to now, and how it helped me today:
Understanding of sources of income and expenses for an independent school: 1-4-2016: The Beginning
Basic understanding and applications of financial ratios: 1-5-2016: Finance 101
Important financial metrics to keep in mind when evaluating a business expansion: 1-6-2016: Amy Yustick, Dana Holding Corporation
Use of table tools in order to easily display data in the spreadsheet: 1-7-2016: Microsoft Excel 2007
Tracing precedents and dependents to easily find and check errors: 1-7-2016: Microsoft Excel 2007
Basic uses of formulas for calculations in the spreadsheet: 1-7-2016: Microsoft Excel 2007 and 1-8-2016: Macros, Formulas, and Data Validation
It felt so good to be able to finally understand how everything would come together, and as a result, I am more excited about this project than before. I will continue working on my model tomorrow, adding more formulas and ratios to the spreadsheet. The more work I do, the more fun it gets!
I began the day by briefly reviewing financial ratios with Mrs. Spurgeon. We talked again about which financial ratios would be the most important, and even added new terminology and ratios to the list. This helped me make sure that I knew the basics, and would be ready to apply them for actually building the model.
I went back to the sources of income and expense that Mrs. Spurgeon and I had brainstormed on the first day of the independent study. These sources of income and expense are very important because without this information, I can’t calculate an operating gain/loss (also called net income) that I can use in my model. I also did some research (along with talking to Mrs. Spurgeon) about what data would be necessary for other important financial data categories so that I could know what other data would be important in order to make calculations. For example, I had to research what goes under the financial term “total liabilities,” which includes everything from accounts payable to long term debt and even loans payable.
I then began to build my model by first defining the parts of a financial ratio in my spreadsheet so that I could later use it to directly calculate that ratio within the spreadsheet. For example, the current ratio is defined by dividing current assets by current liabilities, so in order to find the current ratio, I first needed to find amount of current assets and current liabilities. But with the exception of accountants and other professionals who keep close tabs on financial information within an organization, few people can quickly find the amount of current assets and current liabilities of their company or organization. I needed to make the model as easy to use as possible, so I created formulas to calculate the total amount of current assets and total amount of current liabilities. As it works right now, the model that I’m building instructs the user to input data that is linked to calculating the amount of current assets and current liabilities; some examples of data that are needed include the amounts of all accounts receivable, cash, any money due from the government, all accounts payable, and accrued liabilities. If the user can simply find these data and input them into the model, the spreadsheet will calculate the current ratio for the user by using the information received to calculate the current assets and divide them by the current liabilities. In general, the intention when building a model is to make it easy to use, allowing users to quickly get information from the data they have without the need to do complicated calculations. All of the calculations are determined by formulas, which link cells together and can almost instantly find results based on the data it is given.
Additionally, I organized all these subparts of the financial ratios into the format of a balance sheet, making each of the subparts easy to find and the model easier to use. I could have created an interface that tells the user to input data all over the place on a spreadsheet, but that would be silly, given that most users are familiar with the look and feel of a balance sheet. Finally, I did more research in order to make sure that I wasn’t missing any subpart that should be included in any of the sections of the balance sheet.
Here is a more detailed breakdown of what I learned in the days leading up to now, and how it helped me today:
Understanding of sources of income and expenses for an independent school: 1-4-2016: The Beginning
Basic understanding and applications of financial ratios: 1-5-2016: Finance 101
Important financial metrics to keep in mind when evaluating a business expansion: 1-6-2016: Amy Yustick, Dana Holding Corporation
Use of table tools in order to easily display data in the spreadsheet: 1-7-2016: Microsoft Excel 2007
Tracing precedents and dependents to easily find and check errors: 1-7-2016: Microsoft Excel 2007
Basic uses of formulas for calculations in the spreadsheet: 1-7-2016: Microsoft Excel 2007 and 1-8-2016: Macros, Formulas, and Data Validation
It felt so good to be able to finally understand how everything would come together, and as a result, I am more excited about this project than before. I will continue working on my model tomorrow, adding more formulas and ratios to the spreadsheet. The more work I do, the more fun it gets!
Monday, January 11, 2016
1-11-2016: Financial Analysis in Microsoft Excel
After a nice weekend of rest, I spent time today learning about financial analysis in Microsoft Excel.
I began today by working with the What-If Analysis. The What-If Analysis can manage possible scenarios for a given situation. The Scenario Manager tool can store information for a hypothetical scenario in which values for a formulas would need to be changed. For example, the hypothetical scenario could be that one’s income has changed, but the individual’s income is part of several formulas in an Excel worksheet. One can input the amount of the hypothetical change in income into the Scenario Manager and tell Excel to evaluate the scenario, which would bring to attention all of the changes that could result from that hypothetical scenario. There is also a What-If Analysis tool called Goal Seek. This tool can find a solution to a set of conditions that the user sets. For instance, Goal Seek can find an interest rate that works for a loan amount, length of the loan, and how much one wishes to pay per month.
I also saw more applications of a PivotTable today. When I first learned about PivotTables last Thursday, I was confused about how they worked and the purpose of using one. The videos that I watched today went back to PivotTables, and everything suddenly made sense. I now realize how powerful a PivotTable actually is, and how it can help someone quickly make sense of a lot of information. Because all of the learning is at my own pace, and because my expectations are not to zoom through the courses as fast as possible, I created my own sample income statement to practice creating a table in Excel, and I spent some time playing around with the PivotTable functions and the several possible views one can choose.
Another concept that I learned today was common-sizing, and it is specifically related to finance. Common-sizing is the practice of mathematically converting financial data into information that can be compared across companies of all types and sizes. The online videos taught me about performing common-size analysis with sample income statements and balance sheets. Such common-size analysis may include comparing the percent of operating income or comparing the percent of liabilities between two companies. Common-size analysis makes sense because one only evaluates financial metrics that involve a percent, and can therefore apply this type of analysis to companies of different sizes. I also learned basic formulas to use for common-sizing analysis when working in Microsoft Excel, as well as the formulas’ uses and purposes.
Although I have learned a lot over these past few days, I am by no means proficient with Microsoft Excel. However, I am learning enough to recognize features and follow guided practices with the video courses. I am also trying to practice some of the features on my own, like I did with the PivotTables. I know that I still have a lot to learn, and for the purposes of this intensive, I am only focusing on features that pertain to basic finance.
I also realized that there were several concepts that I was able to better understand when they were presented a second time. I said this about PivotTables in one of the paragraphs above, but the same thing happened for tracing precedents/dependents, data validation, and adding filters to data. Seeing features more than once was helpful, allowing me to gain a more complete understanding of the tool being taught after getting an introduction the first time that I learned about it.
Tomorrow, I will be back at school, working with Mrs. Spurgeon to begin making my financial model. I hope that everything I’ve learned about Microsoft Excel beginning last week will be put to good use during these next several building days!
I began today by working with the What-If Analysis. The What-If Analysis can manage possible scenarios for a given situation. The Scenario Manager tool can store information for a hypothetical scenario in which values for a formulas would need to be changed. For example, the hypothetical scenario could be that one’s income has changed, but the individual’s income is part of several formulas in an Excel worksheet. One can input the amount of the hypothetical change in income into the Scenario Manager and tell Excel to evaluate the scenario, which would bring to attention all of the changes that could result from that hypothetical scenario. There is also a What-If Analysis tool called Goal Seek. This tool can find a solution to a set of conditions that the user sets. For instance, Goal Seek can find an interest rate that works for a loan amount, length of the loan, and how much one wishes to pay per month.
I also saw more applications of a PivotTable today. When I first learned about PivotTables last Thursday, I was confused about how they worked and the purpose of using one. The videos that I watched today went back to PivotTables, and everything suddenly made sense. I now realize how powerful a PivotTable actually is, and how it can help someone quickly make sense of a lot of information. Because all of the learning is at my own pace, and because my expectations are not to zoom through the courses as fast as possible, I created my own sample income statement to practice creating a table in Excel, and I spent some time playing around with the PivotTable functions and the several possible views one can choose.
Another concept that I learned today was common-sizing, and it is specifically related to finance. Common-sizing is the practice of mathematically converting financial data into information that can be compared across companies of all types and sizes. The online videos taught me about performing common-size analysis with sample income statements and balance sheets. Such common-size analysis may include comparing the percent of operating income or comparing the percent of liabilities between two companies. Common-size analysis makes sense because one only evaluates financial metrics that involve a percent, and can therefore apply this type of analysis to companies of different sizes. I also learned basic formulas to use for common-sizing analysis when working in Microsoft Excel, as well as the formulas’ uses and purposes.
Although I have learned a lot over these past few days, I am by no means proficient with Microsoft Excel. However, I am learning enough to recognize features and follow guided practices with the video courses. I am also trying to practice some of the features on my own, like I did with the PivotTables. I know that I still have a lot to learn, and for the purposes of this intensive, I am only focusing on features that pertain to basic finance.
I also realized that there were several concepts that I was able to better understand when they were presented a second time. I said this about PivotTables in one of the paragraphs above, but the same thing happened for tracing precedents/dependents, data validation, and adding filters to data. Seeing features more than once was helpful, allowing me to gain a more complete understanding of the tool being taught after getting an introduction the first time that I learned about it.
Tomorrow, I will be back at school, working with Mrs. Spurgeon to begin making my financial model. I hope that everything I’ve learned about Microsoft Excel beginning last week will be put to good use during these next several building days!
Friday, January 8, 2016
1-8-2016: Macros, Formulas, and Data Validation
Today was another learning day with Microsoft Excel. I finished the online video course that I worked on yesterday and later moved on to a more advanced course.
I started my morning by working with macros. Macros are a string of commands consisting of several steps that allow a user to repeat an action several times without having to manually perform each step. In other words, macros automate a repetitive task in Microsoft Excel by simply pressing a button. Users can create their own macros by the macro recorder. The recorder records and saves the user’s actions, so the macro can be run at a later time.
After finishing the course on the basics of Microsoft Excel, I moved on to a course about formulas and functions in Excel. As explained in yesterday’s blog post, formulas and functions take data and calculate them. I first began with basic formulas that calculated minimum and maximum values, medians, and modes. I then practiced creating some more complicated formulas with help from instructions in the video.
Some of what I learned today built upon what I had learned yesterday. In particular, some of these tools included table functions and lookup features. Today’s lessons covered advanced table functions, which helped me do more with tables, and went more in-depth with lookup features, which helps a user quickly find information. I now have more confidence using both of these features.
Later today, I got to data validation. Data validation adds rules to the range of information a cell can contain. When used correctly, this tool can be helpful because it prevents a user from adding incorrect data. For example, let’s say I’m a teacher creating a spreadsheet to record students’ grades. I might add a data validation to a column in that spreadsheet that contains students’ cumulative grades. I never give my students extra credit opportunities, so the highest possible grade a student could earn in my class is 100. Therefore, I would set a data validation rule to that column preventing myself from adding any grade that is not between 0 and 100. If I attempted to input a number greater than 100, an error message would show up, telling me that the inputted information does not fit the data validation rule, and I would be instructed to change it. This is how data validation can reduce errors, preventing obviously incorrect data from entering a spreadsheet.
Today was more interesting than yesterday. I got to explore other uses for Excel besides its basic functions, learning more about the powerful formulas that help me make sense of data, converting them into meaningful information. The more I learn, the more I see how powerful Microsoft Excel is and what the program can accomplish. As I’m progressing, I’m also seeing that the lessons get more and more interesting.
I will finish this video course on Monday, where I’ll go more in-depth with the What-If Analysis.
I started my morning by working with macros. Macros are a string of commands consisting of several steps that allow a user to repeat an action several times without having to manually perform each step. In other words, macros automate a repetitive task in Microsoft Excel by simply pressing a button. Users can create their own macros by the macro recorder. The recorder records and saves the user’s actions, so the macro can be run at a later time.
After finishing the course on the basics of Microsoft Excel, I moved on to a course about formulas and functions in Excel. As explained in yesterday’s blog post, formulas and functions take data and calculate them. I first began with basic formulas that calculated minimum and maximum values, medians, and modes. I then practiced creating some more complicated formulas with help from instructions in the video.
Some of what I learned today built upon what I had learned yesterday. In particular, some of these tools included table functions and lookup features. Today’s lessons covered advanced table functions, which helped me do more with tables, and went more in-depth with lookup features, which helps a user quickly find information. I now have more confidence using both of these features.
Later today, I got to data validation. Data validation adds rules to the range of information a cell can contain. When used correctly, this tool can be helpful because it prevents a user from adding incorrect data. For example, let’s say I’m a teacher creating a spreadsheet to record students’ grades. I might add a data validation to a column in that spreadsheet that contains students’ cumulative grades. I never give my students extra credit opportunities, so the highest possible grade a student could earn in my class is 100. Therefore, I would set a data validation rule to that column preventing myself from adding any grade that is not between 0 and 100. If I attempted to input a number greater than 100, an error message would show up, telling me that the inputted information does not fit the data validation rule, and I would be instructed to change it. This is how data validation can reduce errors, preventing obviously incorrect data from entering a spreadsheet.
Today was more interesting than yesterday. I got to explore other uses for Excel besides its basic functions, learning more about the powerful formulas that help me make sense of data, converting them into meaningful information. The more I learn, the more I see how powerful Microsoft Excel is and what the program can accomplish. As I’m progressing, I’m also seeing that the lessons get more and more interesting.
I will finish this video course on Monday, where I’ll go more in-depth with the What-If Analysis.
Thursday, January 7, 2016
1-7-2016: Microsoft Excel 2007
Today, I spent my entire day just learning about Microsoft Excel. Mrs. Spurgeon selected an online course for me to get started. I went through the course at my own pace, covering the essentials and most important parts of the program.
A screenshot of a video that I watched today on the difference between relative and absolute referencing in Microsoft Excel:
Everything that I learned today could fit three categories: visual functions, data display features, and data tools. Note that these are not formal categories; I am simply classifying the different tools and features that I learned as such for the purposes of simplification in this blog post.
For visual functions, I primarily learned about how I could customize tables in my spreadsheet. There are several other formatting features in Microsoft Excel, such as templates, styles, and conditional formatting. These are neat tools that save time when one wishes to make a spreadsheet look aesthetically and visually pleasing. I would categorize a formatting tool as a “visual function” because these tools have nothing to do with how data is presented in a workbook; they instead give the spreadsheet a nice look and feel.
For data display features, I learned about grouping data together and consolidating data of the same type. This allows me to easily see categories of data, which can help me quickly find data that I’m looking for. Table and chart tools are methods of displaying data in a way that can be easily visualized and understood more quickly. One can also manage lists and add filters to a group of data, commanding the spreadsheet to only return data that meets criteria that the user specifies. These are “data display” features because they visually help me find and rearrange data. These features do not analyze or change the data; rather, they change how data is presented or found, making it easier to find or understand them.
There are several types of data tools. Most of these are either functions or formulas. Formulas take data, either using them for computing or converting them into a different form. More often than not, formulas perform calculations that require multiple steps. Formulas are constructed using functions. Functions generally perform one calculation, and can be combined with other functions to perform a larger, more complex calculation. Some common functions include addition, average, minimum, and maximum (there are also useless functions like =ROMAN, which converts numbers written in Arabic numerals into Roman numbers, because everyone uses Roman numbers in a spreadsheet). Functions can be used for several different purposes, such as finance, dates, or even trigonometry. There are also other data tools besides functions and formulas, such as the what-if analysis, which can model situations and find an answer for the user, or even proofing tools that can even help check one’s work.
Even though I got to do all of this from home, today was probably my most difficult day so far. It wasn’t easy sitting all day in front of my laptop, trying to learn a complicated program with very little background knowledge about the program. I had to take a lot of mental breaks every now and then. The tools that I learned to use today were not easy to write about, either.
Although today was rather difficult, learning the basics of Microsoft Excel is important. Even though I didn’t like every minute of it, I have to admit that some things that I learned today can be applied to even the life of a normal person. For example, a person planning a budget for a party (or anything that would incur expenses) could use Microsoft Excel to group data together, add numbers and find totals, and make sure that the expenses remain within the budget that the party planner sets. But I know that all of this will eventually help me when I begin building the model with Mrs. Spurgeon, which will hopefully be next week.
A screenshot of a video that I watched today on the difference between relative and absolute referencing in Microsoft Excel:
Everything that I learned today could fit three categories: visual functions, data display features, and data tools. Note that these are not formal categories; I am simply classifying the different tools and features that I learned as such for the purposes of simplification in this blog post.
For visual functions, I primarily learned about how I could customize tables in my spreadsheet. There are several other formatting features in Microsoft Excel, such as templates, styles, and conditional formatting. These are neat tools that save time when one wishes to make a spreadsheet look aesthetically and visually pleasing. I would categorize a formatting tool as a “visual function” because these tools have nothing to do with how data is presented in a workbook; they instead give the spreadsheet a nice look and feel.
For data display features, I learned about grouping data together and consolidating data of the same type. This allows me to easily see categories of data, which can help me quickly find data that I’m looking for. Table and chart tools are methods of displaying data in a way that can be easily visualized and understood more quickly. One can also manage lists and add filters to a group of data, commanding the spreadsheet to only return data that meets criteria that the user specifies. These are “data display” features because they visually help me find and rearrange data. These features do not analyze or change the data; rather, they change how data is presented or found, making it easier to find or understand them.
There are several types of data tools. Most of these are either functions or formulas. Formulas take data, either using them for computing or converting them into a different form. More often than not, formulas perform calculations that require multiple steps. Formulas are constructed using functions. Functions generally perform one calculation, and can be combined with other functions to perform a larger, more complex calculation. Some common functions include addition, average, minimum, and maximum (there are also useless functions like =ROMAN, which converts numbers written in Arabic numerals into Roman numbers, because everyone uses Roman numbers in a spreadsheet). Functions can be used for several different purposes, such as finance, dates, or even trigonometry. There are also other data tools besides functions and formulas, such as the what-if analysis, which can model situations and find an answer for the user, or even proofing tools that can even help check one’s work.
Even though I got to do all of this from home, today was probably my most difficult day so far. It wasn’t easy sitting all day in front of my laptop, trying to learn a complicated program with very little background knowledge about the program. I had to take a lot of mental breaks every now and then. The tools that I learned to use today were not easy to write about, either.
Although today was rather difficult, learning the basics of Microsoft Excel is important. Even though I didn’t like every minute of it, I have to admit that some things that I learned today can be applied to even the life of a normal person. For example, a person planning a budget for a party (or anything that would incur expenses) could use Microsoft Excel to group data together, add numbers and find totals, and make sure that the expenses remain within the budget that the party planner sets. But I know that all of this will eventually help me when I begin building the model with Mrs. Spurgeon, which will hopefully be next week.
Wednesday, January 6, 2016
1-6-2016: Amy Yustick, Dana Holding Corporation
Today, I visited Amy Yustick, a controller for Dana Holding Corporation. Dana is a Fortune 500 company that primarily produces axles for automotive vehicles worldwide, for both original-equipment manufacturers and the aftermarket. I met Mrs. Yustick at the Dana World Headquarters, located in Maumee, Ohio, where her office is located. Mrs. Yustick is also a Maumee Valley parent, vice president of Maumee Valley’s Board of Trustees, chair of the Business Opportunities Task Force, and a member of several other task forces and committees at Maumee Valley.
Dana World Headquarters:
My visit today was for the purpose of researching for my financial model; in other words, I need to figure out what I will include in my model and any other potential issues or parts of the model that I will need to keep in mind. This falls into what I have referred to as the second part of my intensive: finding relevant information that pertains to an expansion. I discussed the two other parts of my intensive on my Introduction and Overview page.
Here is a picture of something that Dana makes:
My visit to the Dana World Headquarters began with Mrs. Yustick taking me on a tour of the main building. She pointed out what Dana does and the history of the company. Even though I learned more about Dana today than I had ever known about the company previously, I’m already considering Dana as a career option because of their free soft drinks for employees (yes, they have a soda fountain that is free and unlimited). Mrs. Yustick also took some time to explain how finance has to do with her job, which expanded upon what I learned yesterday.
But the main reason why I visited Mrs. Yustick today was to interview her so that I could get her perspective of what a business opportunity for the school would involve. She talked about the need to completely think through a business opportunity and its implications. For example, she said that one always needs to consider “what if” questions when thinking about a business expansion. Such potential problems for a Maumee Valley satellite campus could be “What if fewer students enroll at the location than we expect?” or “What if the economy changes while we’re in the middle of the expansion?” or “What if the company who owns the property that we’re renting goes out of business?” While some of them are unlikely, these types of scenarios cannot be ignored when one is in the decision making process of investing a lot of time and money in a huge project.
One thing Mrs. Spurgeon suggested that I ask everyone the question of which three financial metrics are the most important to them when considering a business opportunity. Mrs. Yustick said that her three most important financial metrics are profit, return on invested capital, and the time to cash flow neutral. It will be interesting to see what other individuals think.
I particularly liked the response that she gave me for a question regarding the market and demand if Maumee Valley were to perhaps expand with a satellite campus. She thinks that to evaluate the market for a satellite expansion, we would need to strategically survey individuals with young children. It would be unwise to ask questions like “Would you send your kids to Maumee Valley?” We instead need to ask questions such as “What are your top three important factors in looking for a school?” and give them several answers with boxes to check. If our survey returns results such as “an experiential, hands-on education,” “quality of teachers,” “school culture,” or even “college acceptance,” then it probably wouldn’t hurt to look into the idea of an expansion. But if the answers we received were “size of learning institution,” “price,” “Division I OHSAA athletics,” or even “religious faith,” we would definitely know that it wouldn’t be a good idea to expand with a satellite campus in that area.
Mrs. Yustick’s responses to my questions will keep me thinking over the next couple of days about the model I will create and how to approach these problems that the school needs to keep in mind about evaluating business opportunities.
I will also be interviewing other business professionals who are connected to Maumee Valley, as well as other MV administrators, to get other perspectives on what should go in my model. You can expect some posts on these types of interviews within the next week or so…
Dana World Headquarters:
My visit today was for the purpose of researching for my financial model; in other words, I need to figure out what I will include in my model and any other potential issues or parts of the model that I will need to keep in mind. This falls into what I have referred to as the second part of my intensive: finding relevant information that pertains to an expansion. I discussed the two other parts of my intensive on my Introduction and Overview page.
Here is a picture of something that Dana makes:
My visit to the Dana World Headquarters began with Mrs. Yustick taking me on a tour of the main building. She pointed out what Dana does and the history of the company. Even though I learned more about Dana today than I had ever known about the company previously, I’m already considering Dana as a career option because of their free soft drinks for employees (yes, they have a soda fountain that is free and unlimited). Mrs. Yustick also took some time to explain how finance has to do with her job, which expanded upon what I learned yesterday.
But the main reason why I visited Mrs. Yustick today was to interview her so that I could get her perspective of what a business opportunity for the school would involve. She talked about the need to completely think through a business opportunity and its implications. For example, she said that one always needs to consider “what if” questions when thinking about a business expansion. Such potential problems for a Maumee Valley satellite campus could be “What if fewer students enroll at the location than we expect?” or “What if the economy changes while we’re in the middle of the expansion?” or “What if the company who owns the property that we’re renting goes out of business?” While some of them are unlikely, these types of scenarios cannot be ignored when one is in the decision making process of investing a lot of time and money in a huge project.
One thing Mrs. Spurgeon suggested that I ask everyone the question of which three financial metrics are the most important to them when considering a business opportunity. Mrs. Yustick said that her three most important financial metrics are profit, return on invested capital, and the time to cash flow neutral. It will be interesting to see what other individuals think.
I particularly liked the response that she gave me for a question regarding the market and demand if Maumee Valley were to perhaps expand with a satellite campus. She thinks that to evaluate the market for a satellite expansion, we would need to strategically survey individuals with young children. It would be unwise to ask questions like “Would you send your kids to Maumee Valley?” We instead need to ask questions such as “What are your top three important factors in looking for a school?” and give them several answers with boxes to check. If our survey returns results such as “an experiential, hands-on education,” “quality of teachers,” “school culture,” or even “college acceptance,” then it probably wouldn’t hurt to look into the idea of an expansion. But if the answers we received were “size of learning institution,” “price,” “Division I OHSAA athletics,” or even “religious faith,” we would definitely know that it wouldn’t be a good idea to expand with a satellite campus in that area.
Mrs. Yustick’s responses to my questions will keep me thinking over the next couple of days about the model I will create and how to approach these problems that the school needs to keep in mind about evaluating business opportunities.
I will also be interviewing other business professionals who are connected to Maumee Valley, as well as other MV administrators, to get other perspectives on what should go in my model. You can expect some posts on these types of interviews within the next week or so…
Tuesday, January 5, 2016
1-5-2016: Finance 101
Today, I primarily focused on learning about financial ratios. Financial ratios are an important part in business. One can learn a lot about a business’s financial condition by simply looking at its financial ratios. Having an understanding of them is important in evaluating a business opportunity because financial ratios turn financial data into information that can be used to determine whether or not it would be beneficial to pursue such business opportunity. Understanding these will be important for when I’m researching information for my own financial model that will be my final project.
Here are the ratios that I learned today:
Mrs. Spurgeon likes the lo-tech method of gathering information on sticky notes and posting them to her wall, so I’m going along with it.
If you couldn’t see them clearly, here they are:
Debt to equity
Current ratio
Return on equity
Net profit margin
Debt ratio
Return on sales
Asset turnover
Quick ratio
And these are only a few. There are over a hundred ratios that are used in the financial world, but I am more focused on making sure that I know these ratios in particular for now, as these are the most applicable ratios to a nonprofit organization evaluating a business opportunity.
They all seem simple, and it looks like they all have a quick and easy formula, but they’re actually more difficult than they seem. Each ratio has its own nuances and terminology associated with it. For example, for the return on equity ratio, the formula is net income divided by equity, but in order to understand how exactly the ratio works, I had to learn what equity was and what net income was, and there was even more behind those two terms.
The most difficult of these financial ratios were the current ratio, the debt to equity ratio, and the return on equity ratio. I began my day studying these financial ratios with Mrs. Spurgeon. Again, each formula isn’t hard to understand, but what’s behind the ratio is more important and can be tricky at first. We discussed what each ratio measured (which often led to more “What’s that?” questions) and the reasons for using each ratio. Everything makes sense when applying it to an example. For instance, let’s say we want to evaluate Company A’s current financial health. We could use the current ratio, which is determined by dividing current assets by current liabilities. A current asset is a source of financial value that will soon become cash, and a current liability is some sort of obligation that I will soon pay with cash. This is a good ratio to evaluate current financial health because it only involves the amount of soon-to-become cash and the amount of cash that is soon-to-be-paid-with. In other words, because one only looks at short-term transactions, it shows how an organization or business is doing at the current time. This doesn’t necessarily mean that a higher current ratio is necessarily better than a lower current ratio in the long term, but it’s basically a way of evaluating if an organization or business is able to currently operate without running into trouble in the short-term.
I researched the other ratios listed above by using resources that I found online. After learning the first three ratios, the rest of them weren’t too difficult. I supplemented all of the material I learned today by watching several videos that, once again, explained each ratio, gave a reason for using it, and put it into use with an example.
Although it didn’t seem like I learned a lot today, Mrs. Spurgeon reminded me that all of what I learned today was new, and what you see in the picture was not everything I learned. I also went through applications of each of the ratios and made up my own examples (and checking with Mrs. Spurgeon) to make sure that I understood the trickier concepts. All of the ratios were abstract concepts, and when I was learning them, I could only understand them when I could give them some context.
Additionally, it is important to note that I have simplified some of the concepts that I wrote about in this blog post. However, these simplifications do not change the essence of any concept being discussed, and these simplified explanations will most likely be enough for me to create my financial model.
By the end of the day, I felt a lot better with these ratios, and I am now curious to see how these ratios will affect my research for model and the actual building of the model.
Here are the ratios that I learned today:
Mrs. Spurgeon likes the lo-tech method of gathering information on sticky notes and posting them to her wall, so I’m going along with it.
If you couldn’t see them clearly, here they are:
Debt to equity
Current ratio
Return on equity
Net profit margin
Debt ratio
Return on sales
Asset turnover
Quick ratio
And these are only a few. There are over a hundred ratios that are used in the financial world, but I am more focused on making sure that I know these ratios in particular for now, as these are the most applicable ratios to a nonprofit organization evaluating a business opportunity.
They all seem simple, and it looks like they all have a quick and easy formula, but they’re actually more difficult than they seem. Each ratio has its own nuances and terminology associated with it. For example, for the return on equity ratio, the formula is net income divided by equity, but in order to understand how exactly the ratio works, I had to learn what equity was and what net income was, and there was even more behind those two terms.
The most difficult of these financial ratios were the current ratio, the debt to equity ratio, and the return on equity ratio. I began my day studying these financial ratios with Mrs. Spurgeon. Again, each formula isn’t hard to understand, but what’s behind the ratio is more important and can be tricky at first. We discussed what each ratio measured (which often led to more “What’s that?” questions) and the reasons for using each ratio. Everything makes sense when applying it to an example. For instance, let’s say we want to evaluate Company A’s current financial health. We could use the current ratio, which is determined by dividing current assets by current liabilities. A current asset is a source of financial value that will soon become cash, and a current liability is some sort of obligation that I will soon pay with cash. This is a good ratio to evaluate current financial health because it only involves the amount of soon-to-become cash and the amount of cash that is soon-to-be-paid-with. In other words, because one only looks at short-term transactions, it shows how an organization or business is doing at the current time. This doesn’t necessarily mean that a higher current ratio is necessarily better than a lower current ratio in the long term, but it’s basically a way of evaluating if an organization or business is able to currently operate without running into trouble in the short-term.
I researched the other ratios listed above by using resources that I found online. After learning the first three ratios, the rest of them weren’t too difficult. I supplemented all of the material I learned today by watching several videos that, once again, explained each ratio, gave a reason for using it, and put it into use with an example.
Although it didn’t seem like I learned a lot today, Mrs. Spurgeon reminded me that all of what I learned today was new, and what you see in the picture was not everything I learned. I also went through applications of each of the ratios and made up my own examples (and checking with Mrs. Spurgeon) to make sure that I understood the trickier concepts. All of the ratios were abstract concepts, and when I was learning them, I could only understand them when I could give them some context.
Additionally, it is important to note that I have simplified some of the concepts that I wrote about in this blog post. However, these simplifications do not change the essence of any concept being discussed, and these simplified explanations will most likely be enough for me to create my financial model.
By the end of the day, I felt a lot better with these ratios, and I am now curious to see how these ratios will affect my research for model and the actual building of the model.
Monday, January 4, 2016
1-4-2016: The Beginning
I did two main things on my first day today: learn about Microsoft Excel and brainstorm ideas for the model.
To review, the point of my intensive is to create a financial model that the Business Opportunities Task Force can use to evaluate business opportunities, but in order to do this, there are several things I first need to do, which include learning about the basics of using Microsoft Excel from a financial standpoint and brainstorming ideas for my financial model.
I spent perhaps a couple of hours using online resources that Mrs. Spurgeon had picked for me to get up to speed with Microsoft Excel. Prior to today, I had only ever used Microsoft Excel for its visual purposes in creating a basic table. Even though I didn’t get very far through the video courses, I’ve already learned of several analysis features in Excel. For example, the filter command is one of Excel’s features that can sift through a selection of data and only return data that matches the criteria one specifies.
I expect to learn much more about using Microsoft Excel and how it will allow me to create my financial model, my final project.
Brainstorming and discussion were a huge part of what we did today. Mrs. Spurgeon had several logistical questions regarding potential income sources and expenditures in terms of an expansion. We discussed these together and recorded our thoughts, knowing that I’ll need to do some in-depth research later about actual dollar amounts so that I can eventually put them in my model. Here is a picture of part of our brainstorming, which lists some sources of potential startup costs for a theoretical satellite expansion of the Early Learning Center.
One thing that I’m realizing more and more is that nonprofit organizations (like Maumee Valley) are not that different than businesses. Both have to evaluate the financial feasibility of a project before they dive into it. They both have budgets that need to be managed. They both need to look at their income sources and determine the best use for their money. Nothing is free, even for a 130+ year old school that does a lot for its students and the community.
I wasn’t really able to write that much for today because there are several things that I’m still learning. Mrs. Spurgeon has also been spending some time with basic vocabulary that she uses in the business office and how it translates to me creating a financial model. It’s not easy, coming from someone who has no interest in business or finance, or at least someone who currently thinks this. But I’m willing to learn, and I’m doing this intensive because I love Maumee Valley and want to take a closer look as to how it runs.
I've learned a lot today, and I'm looking forward to the mysteries of tomorrow!
To review, the point of my intensive is to create a financial model that the Business Opportunities Task Force can use to evaluate business opportunities, but in order to do this, there are several things I first need to do, which include learning about the basics of using Microsoft Excel from a financial standpoint and brainstorming ideas for my financial model.
I spent perhaps a couple of hours using online resources that Mrs. Spurgeon had picked for me to get up to speed with Microsoft Excel. Prior to today, I had only ever used Microsoft Excel for its visual purposes in creating a basic table. Even though I didn’t get very far through the video courses, I’ve already learned of several analysis features in Excel. For example, the filter command is one of Excel’s features that can sift through a selection of data and only return data that matches the criteria one specifies.
I expect to learn much more about using Microsoft Excel and how it will allow me to create my financial model, my final project.
Brainstorming and discussion were a huge part of what we did today. Mrs. Spurgeon had several logistical questions regarding potential income sources and expenditures in terms of an expansion. We discussed these together and recorded our thoughts, knowing that I’ll need to do some in-depth research later about actual dollar amounts so that I can eventually put them in my model. Here is a picture of part of our brainstorming, which lists some sources of potential startup costs for a theoretical satellite expansion of the Early Learning Center.
One thing that I’m realizing more and more is that nonprofit organizations (like Maumee Valley) are not that different than businesses. Both have to evaluate the financial feasibility of a project before they dive into it. They both have budgets that need to be managed. They both need to look at their income sources and determine the best use for their money. Nothing is free, even for a 130+ year old school that does a lot for its students and the community.
I wasn’t really able to write that much for today because there are several things that I’m still learning. Mrs. Spurgeon has also been spending some time with basic vocabulary that she uses in the business office and how it translates to me creating a financial model. It’s not easy, coming from someone who has no interest in business or finance, or at least someone who currently thinks this. But I’m willing to learn, and I’m doing this intensive because I love Maumee Valley and want to take a closer look as to how it runs.
I've learned a lot today, and I'm looking forward to the mysteries of tomorrow!
Sunday, January 3, 2016
1-3-2016: Tomorrow's the First Day!
Tomorrow is the first day of the Winter Intensive, the term during which my independent study will be taking place.
I have no idea what to expect. I met with Mrs. Spurgeon last Thursday (12-31-2015) to finalize details, but it didn't really give me an in-depth look at what tomorrow would be like. You can find more information in general terms regarding the plan for my intensive here: Introduction and Overview
Well, that's all I have to say! Looking forward to tomorrow!
I have no idea what to expect. I met with Mrs. Spurgeon last Thursday (12-31-2015) to finalize details, but it didn't really give me an in-depth look at what tomorrow would be like. You can find more information in general terms regarding the plan for my intensive here: Introduction and Overview
Well, that's all I have to say! Looking forward to tomorrow!
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