Ahmed Gritli
Excel Summary
Corporate Finance
Chapter 1: Investment Criteria Conflicts:
Find NPV: =NPV( RRR, 𝐶𝐹1 : 𝐶𝐹𝑛 )+ CF0
FIND IRR: =IRR( 𝐶𝐹0 : 𝐶𝐹𝑛 , (guess_value) )
guess_value: optional, your guess of nearest value of IRR, default is 10%
 to find multiple IRRs, keep increasing the value of the guess to find higher
values of IRR, once you increase and the function yields the very first
guess, you have found all IRRs
Find MIRR: =MIRR(𝐶𝐹0 : 𝐶𝐹𝑛 , discount_rate, reinvestment_rate)
➔ the discount rate is the RRR, the reinvestment rate is the rate at
which the investor is assumed to reinvest their cashflow in, in
this chapter’s context we usually have the reinvestment rate the
same as RRR.
Find Crossover rate between 2 NPVs:
For mutually exclusive projects A and B, to find the crossover rate you
should make an incremental project we’ll call C, (A – B),and find it’s IRR
This project’s cash flows is the difference between project A and B’s cashflows
𝐶𝐹𝐶 = 𝐶𝐹𝐴 − 𝐶𝐹 𝐵
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After that you use the IRR function to find the IRR of this project which is the
crossover rate
Building a Data Table in Excel:
➔ to add another NPV it’s just enough to add a second npv
column and repeat step 2 in the screenshot
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Chapter 2: Working Capital Management
The template is self-explanatory here, but let’s look at the formula needed for
the step4: turnover ratio.
Formula:
=IFERROR( J6 * IF(D11="Month",30,IF(D11="Quarter",90,IF(D11="Halfyear",180,IF(D11="Year",360,0)))) / D6 , 0)
It’s a nested if-statement in excel (if statement inside an if statement) that
makes up the receivable days ratio.
Some Theory:
This formula is used to calculate receivable days, let’s remember the formula:
𝐴𝑣. 𝑎𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝐴𝑣. 𝑎𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 × 360
=
𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
360
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However, the 360 is used when we want to find the turnover within a year, if
we wanted to find turnover within a month we multiply by 30, for a quarter by
90, for a half year by 180. (the excel template assumes 30 days in month/360
days in year), notice that D11 is a dropdown list that you can choose from it
whether you want to find your CCC in a year, month, quarter, or half a year.
Practicality:
IFERROR( formula, error_message): is an excel function used to return an
alternative message when a formula evaluates to an error.
We can notice in picture 2 that instead of showing #DIV/0!, we get a nice
message, we can already see in our original formula that it has 2 parts:
1/ J6*IF(D11="Month",30,IF(D11="Quarter",90,IF(D11="Halfyear",180,IF(D11="Year",360,0))))/D6 : the ratio formula
2/ 0: the alternative if that big chunk evaluates to an error
IF( logical_test, value_if_true, value_if_false): excel function that evaluates a
logical test (equality, greater than, less than, different than…), return a value if
it’s true, return a value if it’s false
If we change A1, C3 becomes not ok.
Now, back to the turnover ratio:
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The formula first takes J6 (Av. accounts receivable) and multiply it by the
outcome of IF, then divide by D6, net sales. We can see that the IF first checks if
D11=”Month” (calculate for a month period), return 30, if not, call another IF
function from within to check if D11=”quarter”, return 90,
if not, another IF will check if D11 is a half year, return 180,
if not, the last IF will check if D11 is a year, return 360,
if not, then return 0.
And that way J6 will either be multiplied by 30, 90, 180, 360 (depending on the
period you’ll calculate CCC), or 0 if D11 has a different value, then divided by
the net sales to form the receivables turnover ratio, the same logic applies for
the rest of ratios.
→ notice how an if statement is called within an if statement when the logical
test evaluates to false, it’s like if/ elif/ else in python!
→same logic applies for the rest of the ratios, however the rest of excel is selfexplanatory, read the screenshot!
Ahmed Gritli
Chapter 3: The Cost of Capital
➔ The template here is self-explanatory, all the values are found
by using cell operations that apply theoretical formulas in the
chapter.
For the median section, median values for unlevered betas and
debt/equity are found using the excel function:
Median( numbers_set ): used to give the median/ the number that is
exactly in the middle of a given number set (you don’t have to
provide it in an ordered way)
e.g: MEDIAN(G6:G10), or MEDIAN(G6,G7,G8,G9,G10) (they’re
identical) gives the middle value for the numbers of that set,
which is 1.23 (corresponding to company A)
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Extra note (we might not need it):
To estimate 𝑟𝑑 we use the YTM approach, in order to estimate YTM in excel we
use the following function:
RATE( nper, coupon, -(Price), Par value) where:
Nper: number of periods
Coupon: coupon payment
-(price) : market price of the bond (negative value)
Par value of the bond
NB: DON’T FORGET THE ANNUALIZATION OF THIS FUNCTION’S OUTPUT (IF
THE INTEREST IS COMPOUNDED SEMI-ANNUALLY, QUARTERLY OR MONTHLY
MULTIPLY THE RESULT OF THAT FUNCTION RESPECTIVELY BY 2, 4 OR 12)
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Chapter 4: Cash flows & Major Financial Indicators
This is the template for chapter 4, the year 2023 in E3 was obtained by using
the function YEAR(TODAY()), that returns the year from a given date
TODAY() is a function that returns today’s date (TODAY() --> 13/11/2023)
And the year 2022 in F3 was obtained by: =E3-1
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The delta represents growth rate in of a given element in the financial
statement.
See how it is calculated by subtracting 2023’s revenue by 2022’s revenue and
dividing by 2022’s revenue. IFERROR is used for aesthetic reasons (display 0
instead of an error message if something is gone wrong).
In the statement of cash flows, the formula of delta uses, in the denominator,
the function ABS( number ) : returns absolute value of a number
IFERROR is explained back in chapter 2.
Ahmed Gritli
notice how the OPEX Cah
was calculated using the
SUM(E11:E13) function,
this function yields the sum
of a set of numbers you
provide,
in this case we have 2500
(E11) ,2600 (E12) and 4200
(E13) that sum up to 9300
Notice this dashboard on another sheet, that has been made using data from
the Financial Statements sheet.
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To do that, you should make a graphical representation of the data you want to
visualize, then you transfer the graph you get into a different sheet (but it will
still be linked to the data you based it on)
Let’s try to do something like the current assets vs current liabilities graph:
To do so, select the values of current assets in 2023 and 2022. Then keep
holding the CTRL button and select the current liabilities of 2023 and 2022.
Then go to Insert -> inset column or bar chart
Select clustered-column and you’ll get it!
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Then, select the chart and right click on it and select Move Chart
Select any sheet that you like and that’s it! Keep creating more charts and
move them together in a single sheet, and you got yourself a dashboard!