Introduction to Microsoft Excel

Pre-Class Material

Copyright 2009 Investment Banking Institute

www.ibtraining.com

Table of Contents
I. Excel Overview II. The Basics III. Formatting IV. Popular Functions V. Excel Shortcuts

Excel Overview
Excel is a powerful spreadsheet program used to store, manipulate, analyze and visualize data
It is the most widely adopted spreadsheet application in the world Component of Microsoft Office, along with Word, PowerPoint and Access

At its most basic level, Excel provides a way to store massive amounts of data in a structured manner
A single file can contain billions of cells, which can all be linked together In addition to storage, however, Excel can handle complex mathematical calculations, reporting and chart creation
Below are some examples of popular tasks you can accomplish:
Data sorting and storage Numeric analysis and charting Financial and statistical modeling Report generation

Excel is used extensively in investment banking

All financial models, databases, tables and charts are created in Excel

Proficiency Expectation
Excel is a junior bankers (associate or below) best friend
A very large percentage of your time will spent using Excel Junior bankers are expected to operate all functions of Excel without using the mouse

Strong Excel proficiency is taught on the job, however, it is wise to be familiar with the application prior to interviewing if you intend to work in this industry
You should be comfortable with the following:
Navigation between cells and worksheets Writing formulas (standard math equations and Excel-specific functions) Cell referencing (i.e. linking cells to one another) Formatting cells (e.g. data and text) Formatting worksheets (e.g. layout and structure)

Prior to your first IBI class, please practice all of the above
We will be using Excel greatly over the next month
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Table of Contents
I. Excel Overview II. The Basics III. Formatting IV. Popular Functions V. Excel Shortcuts

Structure
Files in Excel are called workbooks
A workbook is made up of spreadsheets called worksheets, which are organized in tabs at the bottom of each workbook
You can insert up to 255 worksheets in a single workbook depending on your computers memory

Each worksheet is structured as a grid, which is comprised of rows and columns

Rows represent the y-axis and are numbered along the left Columns represent the x-axis and are headed by letters along the top An intersection of a row and a column is called a cell Data is expressed in the form of numbers (e.g. 569) or text (e.g. Hello) Formulas are used to execute a particular function/calculation or reference another cell or application Every cell has its own unique identifier or coordinate, which reflects the respective row and column it is in
For example: cells B12, AJ4, H203 The column letter always precedes the row number
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Cells are used to store and present data and/or formulas

Layout
Menu Bar Formatting Toolbar Standard Toolbar

Cell Reference Box (i.e. A1)

Formula Box

Cell D6

Row 6

Column D

Worksheet Tab Scroll Buttons

Worksheet Tabs

Toolbars
Standard Toolbar
Copy New Save Print Preview Cut Paste Undo/Redo AutoSum Sort Drawing Help

Open

Print Email

Spell Check

Paint Brush

Function Insert Hyperlink

Chart Wizard

Zoom

More

Formatting Toolbar
Font Menu Bold, Italicize, Underline Merge Cells Increase/ Percent Decrease Decimal Style Border Font Color

Font Size

Right, Center, Left Justification

Currency Style

Comma Style

Increase/ Decrease Indent

Fill Color

More

Equations, Functions and References

In addition to entering data or text within a cell, you can:
Write equations to perform standard math functions
For example: =5+6, =109/(78-16)^2 All equations must begin with an =, + or - sign The order of operations is in effect

Write special functions to execute a pre-set formula in Excel

For example: =SUM(6,3,8,2), =MIN(9,4), =IF(5+3=8, yes, no)
=SUM( ) --> summation of data =MIN( ) --> finds the minimum from a set of data =IF( ) --> conditional statement with a TRUE or FALSE output

For a function to exist within a cell, an = must be the first entry in the formula box All functions begin with a function name, followed by a set of parentheses, which encapsulate the inputs required by the function
Inputs are separated by commas (,)

Equations, Functions and References (cont.)

Create references or links to other cells
For example: =G14 Referencing another cell delivers the output of that cell into the active cell
Therefore, if cell G14 = 72, then a reference to cell G14 would retrieve the value 72

Similar to equations, all cell references must begin with an =, + or - sign

Equations, functions and references are not mutually exclusive

All three (3) practices can be included within one cell
For example: =B16/SUM(5,F67:F78)^3
A colon between two cells represents a range by where all the cells in between are also included

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Auditing
Cell referencing is a necessary practice in financial modeling
A workbook with many worksheets may perhaps only have one worksheet devoted to hard inputs (e.g. assumptions tab) with the rest comprised fully of links As such, recognizing the flow of data within a model is a very important aspect of understanding the model In addition, wrong links are the most common mistakes for an incorrect model

Therefore, Excel provides an auditing tool to track the relationships between linked cells
Specifically, for any cell there is the ability trace its precedents and see its dependents
Trace/Delete Dependents Insert Remove All Arrows Comment

Trace/Delete Precedents

Trace Errors

Circle/Remove Invalid Data

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Common Output Errors

Below are a list of common output errors users experience
#REF!
Occurs when a cell reference is not valid Very common when you delete a row or column that contained a cell with dependents

#N/A
Occurs when a value is not available to a function or formula For example, using an argument in an array formula that does not have the same number of rows or columns as the range that contains the array formula

#VALUE!
Occurs when the wrong type of argument or operand is used For example, entering text when a formula requires a number or a logical value, such as TRUE or FALSE

#NUM!
Occurs with invalid values in a formula or function Common in iterative functions, such as IRR or RATE, where Excel cannot find a result

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Common Output Errors (cont.)

#NULL!
Occurs when you specify an intersection of two areas that do not intersect Often happens if you forget to separate ranges with a comma in a function

#NAME?
Occurs when Excel does not recognize text in a formula Common causes are (i) misspelling a function name, (ii) forgetting to use quotations around text within a formula or (iii) using the wrong syntax when referencing other worksheets

#DIV/0!
Occurs when a formula divides by zero or a blank cell

#######
Occurs when the numbers or text displayed in the cell are too long for the column width
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Common Output Errors (cont.)

Errors are very problematic due to the linked nature of cells in financial models
A single cell error may carry-forward in a domino-effect into every dependent cell, either through direct reference or indirect reference To prevent this from happening, bankers like to use the ISERROR Function to make sure error cells return useable data

The ISERROR Function returns TRUE if the value is any type of error (e.g. #REF!, #N/A, #VALUE!, etc.)
=ISERROR(value); is often used in conjunction with IF statements (discussed in further detail in Section IV) For example: cell B19 = #REF! =IF(ISERROR(B19),0,B19 --> NA
This ensures that if cell B19 is an error, then put 0 in its place, otherwise leave B19 as it is

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Excel Help
Get used to using the Help menu (last selection in the menu bar)
It is an excellent resource for questions you may have 9 out of 10 times, your answer will be found in the Help menu Even a list of shortcuts can be found here Google is also a great resource for help with Excel

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Table of Contents
I. Excel Overview II. The Basics III. Formatting IV. Popular Functions V. Excel Shortcuts

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Formatting Spreadsheets
Properly formatting is a crucial skill in investment banking
As a client-oriented business, there is naturally a significant focus on presentation In addition, because banks solicit investors and/or buyers on their clients behalf, it is necessary that all materials look clean, organized and professional

It is often said that a good-looking presentation with all the wrong numbers is actually better than a sloppy presentation with all the correct numbers Proper formatting is very important when building models
Formatting adds another layer of distinction to numbers, which in turn facilitates understanding of the model In addition, a clean and well-organized layout enables a model to scale better

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Color Coding
Numeric data that is inputted directly in a cell (i.e. not referenced from another cell) is called a hard input
For example: =5, =5+6 or =SUM(5,6,7) Cells that contain only hard inputs are always formatted in BLUE This represents standard convention across Wall Street

Cells that contain only reference data are always left BLACK
For example: =H32, =H32+K84 or =SUM(H32:H40, K84) This represents standard convention across Wall Street

In instances where a cell contains both a hard input and a cell reference, the cell is commonly formatted GREEN
For example: =5+H32 or =SUM(H32:H40,6) There is no standard across Wall Street This scenario is usually avoided as it is considered poor modeling etiquette to include both a hard input and a cell reference in one cell
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Formatting a Cell
Cell formatting can be found in the menu bar under Format
Highlight one or many cells to format at once
Data should never be left unformatted unless it is text Be consistent with decimal places Negative numbers should always be in parentheses Only the first and total numbers should have a currency symbol in front Protecting cells, sheets or workbooks makes the information read-only
19 $5.0 2.2 3.5 $10.7

Conditional Formatting
Conditional formatting allows a cell to automatically change its format depending on a specific condition you set
For example: If a cells output is greater than 25, then format it BOLD and PURPLE, otherwise format it ITALICIZED and RED Conditional formatting can be found in the menu bar under Format

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Copying and Pasting

Copying and pasting cells is used a great deal in Excel to avoid retyping repetitive formulas or functions
A cell reference that is copied and pasted from one cell into another will move its coordinates accordingly (i.e. by the same number of rows and columns as the cell itself)
For example: if a cell is referencing data from a cell 20 rows above and 11 columns to the left, regardless of where the copied cell is pasted, the cell reference will remain looking 20 rows above and 11 columns to the left, the only difference being from a new location

Sometimes, when you copy and paste a cell reference, you do not want the coordinates to change
Locking a cell reference is called anchoring a cell You can anchor either just the row, just the column or both Anchoring a cell involves putting a $ sign in front of the row and/or column you want to lock
=B6 --> =$B6 or =B$6 or =$B$6

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Copying and Pasting (cont.)

When you copy and paste a cell, you copy and paste all the data and formatting characteristics of that cell
There are instances where you may only want to copy certain characteristics, such as just the value, formula or format Paste Special allows you to pick and choose the aspect(s) you want to paste

Paste Special is found in the menu bar under Edit

To protect sensitive formulas, bankers often paste over their models with Paste Special Values before they send it to prospective investors or buyers Paste Special- Formats is also frequently used by bankers
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Page Setup and Print Ranges

Get in the habit of setting margins and print ranges when you work in Excel
Having tables and graphs fit appropriately on a page with page breaks in logical places is an important part of formatting Page Setup is found in the menu bar under File
Print ranges can be set in Page Setup or in Page Break Preview under View in the menu bar

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Table of Contents
I. Excel Overview II. The Basics III. Formatting IV. Popular Functions V. Excel Shortcuts

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Popular Math Functions

SUM Function: SUM(number1,number2,)
Adds all the numbers in a range of cells

AVERAGE Function: AVERAGE(number1,number2,)

Returns an average of its arguments, which can be numbers or names, arrays or references that contain numbers

MEDIAN Function: MEDIAN(number1,number2,)

Returns the median, or the number in the middle of a set of given numbers

MIN Function: MIN(number1, number2,)

Returns the smallest number in a set of values. Ignores logical values and text

MAX Function: MAX(number1, number2,)

Returns the largest number in a set of values. Ignores logical values and text

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Popular Math Functions (cont.)

ROUND Function: ROUND(number,num_digits)
Rounds a number to a specified number of digits For example: =ROUND(5.156,1) --> 5.2

COUNT Function: COUNT(value1,value2,)

Counts the number of cells that contain numbers and numbers within a list of arguments COUNTA( ) --> Counts the number of cells that are not empty
12 44 6 9 7 -2 83 7 <- 1 <- 1 <- 1 <- 1 <- 1 <- 1 <- 1 COUNT( ) --> 0 0 0 0 0 0 0 7 <- 1 <- 1 <- 1 <- 1 <- 1 <- 1 <- 1 COUNTA( ) --> x x x x x x x 7 <- 1 <- 1 <- 1 <- 1 <- 1 <- 1 <- 1

COUNT( ) -->

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Popular Statement Functions

IF Statement: IF(logical_test,value_if_true,value_if_false)
Returns one value if a condition you specify evaluates to TRUE and another value if it is FALSE For example: cell B7=5
=IF(B7<10,1,2) --> 1 =IF(B7<10,yes,no) --> yes

Nested IF statements are IF statements inside of IF statements

For example: cell B7=5 and H4=good
=IF(B7<4,yes,IF(H4=good,yes,no)) --> yes Therefore, if cell B7=5 or H4=good, then the outcome will be yes otherwise it will be no

COUNTIF Statement: COUNTIF(range,criteria)

Counts the number of cells within a range that meet the given condition yes <- 1 For example: =COUNTIF(range,yes) yes <- 1
COUNTIF( ) --> no yes 3 <- 1

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Popular Statement Functions (cont.)

AND Statement: AND(logical1,logical2,)
Returns TRUE if all arguments are TRUE and returns FALSE if any argument is FALSE For example: cell B7=5; C4=6
=IF(AND(B7,C4)=5,yes,no) --> no

OR Statement: OR(logical1,logical2,)
Returns TRUE if any argument is TRUE and returns FALSE if all arguments are FALSE For example: cell B7=5; C4=6
=IF(OR(B7=5,C4=5),yes,no) --> yes

NOT Statement: NOT(logical)

Reverses the logic of its argument: returns FALSE for a TRUE argument and vice versa For example: cell B7=5
=IF(NOT(B7)=5,yes,no) --> no
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Table of Contents
I. Excel Overview II. The Basics III. Formatting IV. Popular Functions V. Excel Shortcuts

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Excel Shortcuts
As mentioned earlier, junior bankers are expected to operate all functions of Excel without using the mouse Regardless of how fast you think you are at using the mouse, divide your time by half and thats how much faster you will be with just the keyboard
All functions in Excel can be accessed via the keyboard For example, notice the underlined letter in each title in the menu bar
Holding down the ALT key and the underlined letter at the same time gives you access to that particular menu The same method of navigation works for all sub-headers too

Excel has implemented keyboard shortcuts for common functions and tools to collapse the navigation time even more
Common I-banking Excel shortcuts are on the following slides Unfortunately, these shortcuts are not designed for Windows Vista or MAC OS
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Excel Shortcuts (cont.)

Navigating in Excel Navigating in Excel Navigating in Excel Navigating in Excel Navigating in Excel Navigating in Excel Navigating in Excel Navigating in Excel Navigating in Excel Navigating in Excel Navigating in Excel Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Entering and editing data Hiding / Unhiding Rows and Columns Hiding / Unhiding Rows and Columns Hiding / Unhiding Rows and Columns Hiding / Unhiding Rows and Columns Spell Check. Insert a comment. Fill down. Fill to the right. Undo the last action. Redo the last action. Hide the selected rows. Unhide any hidden rows within the selection. Hide the selected columns. Unhide any hidden columns within the selection. F7 SHIFT+F2 CTRL+D CTRL+R CTRL+Z F4 or CTRL+Y CTRL+9 CTRL+SHIFT+( (opening parenthesis) CTRL+0 (zero) CTRL+SHIFT+) (closing parenthesis) Edit inside a cell (edit cell mode) Once inside edit cell mode (F2) ...Start a new line in the same cell. ...Highlight individual characters within cells ...Highlight contiguous string within cells ...Delete the preceding character. ...Delete the character to the right of the insertion point. ...Cancel a cell entry. ALT+ENTER SHIFT+Arrow keys SHIFT+CTRL+Arrow keys BACKSPACE DELETE ESC F2 Switch between Worksheets Switch between Workbooks Move one character up, down, left, or right. Go to end of a contiguous range Select a cell range Highlight a contiguous range Select entire worksheet Move to the beginning of the line. Go To Move a Sheet/Copy a Sheet Change Zoom Sizing Complete a cell entry and select ...the cell below. ...the previous cell above. ...the next cell to the right. ...the previous cell to the left. Delete cell and then get inside the cell Delete cell/selection. ENTER SHIFT+ENTER TAB SHIFT+TAB BACKSPACE DELETE CTRL-PageUp/CTRL-PageDown CTRL-Tab Arrow keys CTRL-Arrow Keys SHIFT+Arrow keys SHIFT-CTRL-Arrow Keys CTRL+A HOME F5 Alt-E-M Alt-V-Z

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Excel Shortcuts (cont.)

Selecting, grouping, inserting, and deleting cells Selecting, grouping, inserting, and deleting cells Selecting, grouping, inserting, and deleting cells Selecting, grouping, inserting, and deleting cells Selecting, grouping, inserting, and deleting cells Selecting, grouping, inserting, and deleting cells Selecting, grouping, inserting, and deleting cells Copying and Pasting Copying and Pasting Copying and Pasting Copying and Pasting Copying and Pasting Formatting Data Formatting Data Formatting Data Formatting Data Formatting Data Formatting Data Formatting Data Formatting Data Formatting Data Formatting Data Formatting Data Formatting Data Formatting Data Formatting Data Formatting Data Formatting Data Formatting Data Enter and calculate formulas Enter and calculate formulas Enter and calculate formulas Enter and calculate formulas Enter and calculate formulas Enter and calculate formulas Enter and calculate formulas Enter and calculate formulas Enter and calculate formulas Enter and calculate formulas Enter and calculate formulas Apply the outline border to the selected cells. Remove the outline border from the selected cells. Start a formula. In a formula, display the Insert Function dialog box. Insert an AutoSum formula with the SUM function. Copy the value from the cell above into the cell or the Formula Bar. Copies a formula from the cell above cell into the cell or the Formula Bar. Alternate between displaying cell values and displaying formulas. Recalculate all worksheets in all open workbooks. Anchoring "Fixing" Cells Go to precedent cell(s) Highlight dependent cells Auditing Toolbar (Go to precedent and dependent cells) CTRL+SHIFT+& CTRL+SHIFT+_ = (equal sign) SHIFT+F3 ALT+= (equal sign) CTRL+SHIFT+" (quotation mark) CTRL+' (apostrophe) CTRL+` (single left quotation mark) F9 F4 - must be in edit cell mode (F2) CTRL-[ F2 Alt-T-U =$F$4*G125 1,254.34 1,254.34 =F45*G12 Boldface Italicize Underline Strikethrough CTRL+B CTRL+I CTRL+U CTRL+5 1,254.34 1,254.34 1,254.34 1,254.34 Highlight Entire Row Highlight Entire Column Group Rows or Columns Ungroup Rows or Columns Clear the contents of the selected cells. Delete the selected cells. Insert blank cells. Copy the selected cells. Cut the selected cells. Paste copied cells. Copy, then Paste Special Formats Copy, then Paste Special Formulas Display the Style dialog box. Display the Format Cells dialog box. Applies the general format Number format: 2 dec places, thousand separator, and minus sign () for neg values. Currency format: 2 decimal places (negative numbers in parentheses). Percentage format with no decimal places. Exponential number format with two decimal places. Date format with the day, month, and year. Time format with the hour and minute, and AM or PM. SHIFT+SPACEBAR CTRL+SPACEBAR SHIFT+ALT+RIGHT ARROW KEY SHIFT+ALT+LEFT ARROW KEY DELETE CTRL+MINUS SIGN CTRL+SHIFT+PLUS SIGN CTRL+C CTRL+X CTRL+V CTRL+C, Alt-E+S+T CTRL+C, Alt-E+S+F ALT+' (apostrophe) CTRL+1 CTRL+SHIFT+~ CTRL+SHIFT+! CTRL+SHIFT+$ CTRL+SHIFT+% CTRL+SHIFT+^ CTRL+SHIFT+# CTRL+SHIFT+@ 1254.34 1,254.34 $1,254.34 125434% 1.25E+03 7-Jun-03 8:09 AM

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Excel Shortcuts (cont.)

Special characters Special characters Special characters Special characters Special characters Naming cells, Hyperlinks, inserting time and date Naming cells, Hyperlinks, inserting time and date Naming cells, Hyperlinks, inserting time and date Naming cells, Hyperlinks, inserting time and date Naming cells, Hyperlinks, inserting time and date Naming cells, Hyperlinks, inserting time and date Press F2 to edit the cell, turn on NUM LOCK, and then press the following keys by using the numeric key pad: Cent . Pound sterling . Yen . Euro . Name a cell. Insert a hyperlink Activate a hyperlink. Enter the date. Enter the time. Display a drop-down list of the values in the current column of a list ALT+0162 ALT+0163 ALT+0165 ALT+0128 CTRL+F3 CTRL+K ENTER (in a cell with a hyperlink) CTRL+; (semicolon) CTRL+SHIFT+: (colon) ALT+DOWN ARROW

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