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!
Friday, January 15, 2016
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!
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