Are you guilty of these bad practices in Excel?
A great article by the Financial Modeling World Cup team. Its pays to remember that good decisions based on bad financial modeling can lead to costly business mistakes.
- Usage of long and complex formulas.
Long formulas are hard to write, read, understand, check and improve. Keep your Excel formulas short and simple by looking for functions that are simply more effective!
Also, check your initial data structure – you might feel the need to use long and complex formulas if the dataset is poorly organized.
- Usage of merged cells.
One of Excel’s most condemned practices is the usage of merged cells. Anyone who is using the Excel file after you will be notorious if they will try to move, sort, or do any other data manipulations with the merged cells.
To avoid the usage of merged cells, use the “Center Across Selection” function. Go to Home -> Alignment group -> Find the arrow in the bottom-right corner -> Text Alignment -> Horizontal -> Center Across Selection.
- Usage of help cells hidden from the end-user.
For the model’s reusability and later improvements, it is always better to be transparent in your calculations. If you hide the cells or simply color the inputs in the same colour as the cell, it will be hard for other people to edit the file later.
- Putting numbers directly into formulas.
The model will be very hard to update later if you put numbers directly into formulas and not into a designated place for assumptions. This will poorly affect the usability and time spent on making model adjustments.