AN EXCEL APPLICATION USING MSN MONEYCENTRAL INVESTOR STOCK
QUOTES BRINGS ACCOUNTING TO LIFE
Laurence R. Paquette, School of Business, Francis Marion University, Florence, SC 29501,
(843) 661-1419, lpaquette@fmarion.edu
ABSTRACT
Most of us are aware of the wealth of tools available within Excel as well as the fact that it is the
software package most widely used by accountants. This spreadsheet application demonstrates
the ability of this package to query and import financial information from an external database. It
also reinforces the importance of adequate records and documentation, as well as the tax
consequences of investing decisions.
INTRODUCTION
Today professional investors, financial planners, as well as individual investors actively use their
computers as part of the investment decision making process as well as tracking the performance
of ones investment holdings. The goal of this paper is to describe a particularly useful application
of Excel. This application evolved from a requirement in my Financial Accounting course that
students work on a project that involves assessing the financial health of a company of interest to
them. The objective of the project is twofold. The first is to have them use the tools that they
were exposed to in their software application course and secondly to have them work with
financial information found on the web that hopefully will bring life to the accounting material
being discussed in class.
As part of this project, I require them to look at a number of financial sites such as Hoovers,
Mergent Online, Forbes, company annual report, and the firms 10K found at the SEC site.
Recently I began to have them also use MSN MoneyCentral Investor Stock Quotes. I required
them to download information from that site for their company as well as for peer companies
(similar SIC codes etc.) The approach for retrieving information from this site is quite different
from the others in that information is retrieved from this external database while operating within
the Excel environment. Once I became aware of how easy it was to tap into market information
for stocks from within Excel I decided to develop the following portfolio valuation application.
OVERVIEW OF THE APPLICATION
This application will involve developing a workbook called Portfolio. The workbook will consist
of three sheets titled PortfolioInventory, MSNMoneyQuotes, and PortfolioValue. The primary
purpose of the sheet titled PortfolioInventory is to document the investment holdings within the
portfolio. This record keeping process is absolutely essential as one develops a portfolio in order
to track the performance of the holdings as well as to provide needed information when a holding
is sold. A hypothetical portfolio is shown in Figure 1. You will note that this portfolio is limited
to investments in common stock. One could also include mutual funds, real estate, and bonds in
the portfolio as well. In addition to the type, ticker symbol, and description of each investment
the worksheet contains the number of shares purchased, the cost per share, trading fees, and the
dates the investments were made ( the purchase date will be needed for tax purposes as will be
seen later).
Figure 1 PortfolioInventory Worksheet
The information found in columns G and H will serve as the source for columns D and H found
in the PortfolioValue worksheet (Figure 3). These columns will be needed to establish the cost
basis of the investment as well as to determine if the gain is a short or long term gain.
The sheet titled MSNMoneyQuotes shown in Figure 2 contains information that is accessed from
an external database. The purpose of this sheet is to provide the user with a current share price
for each stock holding. Please note that even though the data will be accessed directly from
within Excel you must be “online” in order to retrieve the information successfully. The
descriptive information in rows 3 and 4 of the sheet shown in Figure 2 is entered by the user. The
date and time stamp in cell A4 is provided by the function =NOW(). This will associate a date
and time for the information one is about to retrieve.
Figure2 MSNMoneyQuotes Woksheet
The rest of the information shown in the worksheet is obtained by using the Data pull down
menu in Excel. Select Import External Data and then choose Import Data. Next choose MSN
Money Central Investor stock Quotes and indicate that you would like the data to appear in cell
A9 in the existing worksheet. One is then prompted for parameter values and the ticker symbols
HD, LOW, GE, IBM, MSFT, and CVS are entered and accounting and financial information for
the specified companies will appear as shown in Figure 2. In addition to the information shown
above 52 week highs and lows, market capitalization, EPS, P/E ratio, and number of shares
outstanding are included for each company. Note that there are also hyperlinks for charting and
news for each company in columns B and C. The prices shown in column D titled Last will be
the source for column E found in the PortfolioValue worksheet (Figure 3).
The sheet titled PortfolioValue shown in Figure 3 values the portfolio and establishes gains or
losses that have occurred in our hypothetical portfolio. It should be pointed out that these gains
or losses are unrealized. A separate workbook can be used to track holdings that have been sold
and the associated realized gains and losses.
Figure 3 PortfolioValue Worksheet
The market value for each holding is simply the product of column C and column E, and the gain
or loss is simply the result of subtracting column D from column F.
IT’S A TAXING DECISION
If one is going to invest, whether it is in stocks, mutual funds, real estate or other investment
vehicles it is essential that one has a basic understanding of capital gains. The tax rate associated
with a capital gain or loss depends on ones income from other sources, how long the asset is
held, and what type of asset it is. In our case here the type of asset is limited to common stock.
You may have noticed that figure 3 included columns titled days held and a categorization of
long or short. The number of days a stock has been held is calculated by subtracting the purchase
date for each stock from the date time stamp that appears in cell B2. This date stamp, like before,
is provided by the =NOW function and not only provides valuable documentation but is also
used for the days held calculation.
The column titled DaysHeld is important in that if a capital gain is categorized as long term it is
eligible for favorable tax treatment. A gain or loss is categorized as long term if it is held for
longer than one year. The categorization in the last column of the worksheet is determined using
an IF statement and comparing the number of days held to 365. Short term gains are taxed at an
individuals ordinary income rate, which ranges from 10% to 35%. Contrary to popular opinion,
not all long term rates are taxed at 15%. For investment securities the long term rate can be 0%
and 5% for individuals in the 10% and 15% federal income tax brackets. For individuals in the
25% federal income tax bracket or higher capital gains are taxed at 15%. So the distinction of a
gain being categorized as long term can have an enormous impact on the amount of tax the
individual is liable for.
There are a host of considerations when one is deciding to sell a stock but clearly, one should
consider what the tax liability is based on the long/short distinction. An approach to single out
which purchases qualify for the favorable treatment extended to long term gains is to use the auto
filter command found in the Data drop down menu in Excel. Use of this feature results in each
column heading having a drop down arrow. Using the pull down arrow in column J and selecting
the criteria Long results in a list that filters out all gains/losses categorized as Short as seen in
Figure 4.
Figure 4 Long Term Gains/Losses
STILL ANOTHER CONSIDERATIONCHOICE OF A COST BASIS
Another key to a smart sale is understanding the cost basis or price paid for a stock purchase.
This is simply column D in Figure 4. Figure 4 discloses that there are two holdings of CVS that
qualify as a long term gain. There is also one holding that is categorized as a short term gain.
Just as there are various ways to cost merchandise inventory in accounting systems there are
similar costing systems used in determining the cost basis of shares of stock that are sold. Clearly
if one was in the 25% tax bracket it would be to their advantage to sell those shares that could be
characterized as long term gains. However, if one does not specify prior to the sale which shares
are to be sold, the first-in first-out (FIFO) method is required by the IRS to be used to account for
which shares are sold. For example, if 100 shares of CVS stock are sold without specification,
then it is assumed that the shares purchased on 11/1/2003 are those sold. As you can see there is
a larger gain associated with these shares than those purchased at the later date 1/3/2005 and
consequently a greater tax liability. This is not surprising in that many stocks appreciate over
time and the use of the FIFO method leads to paying more taxes sooner.
There is an alternative approach to determine the cost basis of the shares being sold and that
method is referred to as the specific identification method. The IRS allows one to select or
identify the shares that are being sold. To comply with the tax laws one must identify the shares
being sold either by the purchase date or cost basis before the sale. It would reduce the tax
liability if one specified that the shares of CVS being sold are those purchased on 1/3/2005. If the
investment holdings include mutual funds there is still a third alternative for determining the cost
basis using a method referred to as the average cost method for calculating the taxable profit or
loss when selling a portion of ones holdings. Most individuals use this method in part because it
is the simplest method when selling mutual fund shares, however this method is not necessarily
optimal for reducing ones tax burden.
CONCLUSION
It is always a challenge to motivate the students in an introductory accounting course and I am
always looking for a way to personalize the material and at the same time provide them with
skills that they can readily see an immediate application for. Hopefully this application serves to
demonstrate that concepts such as unrealized gains, cost-basis methods used in accounting, and
tax consequences of decisions are not topics limited to students majoring in accounting. Another
objective of this application is to reinforce and extend those skills learned in the software
applications course and apply them in an accounting context.