A Dashboard on Temperature and Rainfall

In this post, I have tried to make an excel based dashboard taking data from past questions asked in Finals of 2017 Modeloff, Section 4 – Data Diving. The question gave temperature and rainfall data of 18 states of the USA for the year 2010. The task was to bring the data to life, show pattern and information hiding in it.

A map was also given and asked to use it optionally or we could use Excel’s newer map tools. However, I have not used the map or any other map tools for the dashboard.

The time given in test was 60 min, but I have taken way more time making it.

What interested me to make a dashboard on data was because a lot of Bigdata analysis is done on temperature and rainfall. I thought it would a learning for me as well to make such a dashboard in excel.

The dashboard gives a standalone and relative position of the city selected in terms of highest/lowest/average temperature and rainfall.

 

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There are two drop downs, one for a city other for a month. The three tables give yearly, monthly, and overall data. The last table giving overall data also highlights selected city and maximum/minimum data.

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Two line and bar combination charts are given which talks about the temperature and rainfall for the year and month in detail. With chart at the top, one can find hottest months in the year and most/least rainy months. The chart at the bottom can help you to analyze the specific month.

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Two scatter plots are also given to put the data of city for the month you choose in perspective. Here you can find cities which more or less hotter/rainy than the city and month of your choice. Please take care of the axis name while you read the charts. The red dot is your city.

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link to Dashboard

Hope you find the the dashboard useful. Any comments on further improvements are welcome.

 

 

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Comparing two sets of values – Graphically

Given with two sets of data like below, and asked to compare them graphically, what charts will come to your mind.

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Today, I will show you to compare two sets of values using scatter plot chart. something like this

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the data points above the (x=y) slanted dotted line show increase in value vs first value and vice-versa for points below the line. Nifty right! It visually shows at once the points have higher values than previous ones.

Just select the data >> goto insert chart >> select scatter plot chart, all your data points are plotted. Now for an x=y slanted dotted line, the plot below as another series

0                0          or lower than your lowest data point

100            100     or higher than your highest data point

select the chart first, goto chart tools >> design >> select data

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like this

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select the red dots, right click and add the trendline.

format the dots to become invisible, format the line to a different color and dotted.

format the x and y axis to numbers hide the highest number of slanted (x=y) line.

In my case, I have axis formatted from 10 to 90.

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Bingo!!!

Make chart say more with XY chart labeler add-in and other formulas, look like below

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Comparing List

Sharing a quick tip on comparing list. Select two list and press Ctrl+fore slash (usually above enter button).

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It highlights the row difference i.e. whenever there are differences in text/numbers in two lists will be highlighted. Similarly column diference can be highlighted with Ctrl + Shift + fore slash

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Start from Home

Does it irritate you to open and see an excel file with active cell not at the first cell or top left corner and then you have to scroll every worksheet to see it from start or It might simply annoy your boss to open an excel file sent by you with active cell not in top left.

CTRL + HOME is short cut key to take to the top left corner and CTRL + PAGE UP is the short key that takes you to worksheet on left.

So if you start with the last worksheet of excel file keeping CTRL button pressed, start pressing HOME  and PAGE UP alternatively.

After doing this you will end up at the first worksheet of your excel file with active cell at top left of every worksheet.

For that matter, it can be an excel best practice to save every file with active cell at top left.

CIAO!

Depreciation calculation – Maximize the benefit

Today I got a mail from Modeloff for registration of their 2017 championship event, in addition, new past questions were uploaded. This blog refers to one of their past questions asked in 2016 championship event Round 2 Section 4 – Case Study – Maximize the Benefit. In the question, they essentially asked to calculate different depreciation method and recommend the most tax efficient tax method. The time awarded was 36 min. The question served me as a great refresher to different depreciation method calculation, although took much longer time than that was given. I thought sharing the solution would be great.

The depreciation methods in question were Declining balance (DBM), Straight line (SLM), Units of production (UOP), Sum of years (SOY). The excel functions like DB, SLN, SYD serve little purpose here as the calculation is far more complex.

A method for calculation of DBM, UOP & SOY was same as to calculate the yearly depreciation rate >> reverse the rates >> calculate depreciation. The reverse ticker method is used to reduce the calculation load when we have different depreciation rates each year coupled with CAPEX lasting number of years, otherwise, the calculation will be difficult to handle.

All the yearly depreciation rates are calculated first and then reversed using OFFSET function. The reversed rates are then multiplied with CAPEX using SUMPRODUCT.

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Have a better understanding of formulas after looking at the worksheet linked. It takes a time to understand and even longer to master. But very helpful in building complex models.

In SLM the depreciation rate is constant for the given years. It is relatively easy to calculate, the challenge here is to remove the assets which are fully depreciated otherwise the depreciation will be inflated. The formula keeps accumulating the depreciation till the assets are fully depreciated, as the years goes beyond the life of asset it starts subtracting the fully depreciated asset depreciation from the accumulated depreciation. The formula again requires practice to master.

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The depreciation tax shield is calculated by multiplying the tax rate and total yearly depreciation. NPV of tax shield is calculated using discount rate given. Higher the NPV more preferred the method

Please go through the file linked to have a better understanding of different depreciation method calculation. The question file is also inserted in the worksheet.

Link to the file : Depreciation_Maximize_Benefit

Thanks!

 

 

 

Data Analysis by Date

Recently, I was given sales data to be analyzed by date. It was suspected that more sales is done towards the end of month to meet the month end target. Essentially they wanted to know the sales pattern in months across the years to be divided between dates 1-20, last 3 days and remaining days. Different ending date of months made the problem difficult.

The function EOMONTH was there for rescue. It returns the last day of the month that is the indicated number of months before or after start date. It is extensively used in financial world.

I have created dummy data to show the analysis. First I created helper columns to breakdown the problem. Columns were created for first date of the month, 20th date, 3 days before last date and last date.

 

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By giving -1 as months after start date and then adding 1 to it gives me first date of the month. The last date of the month was EOMONTH function with 0 month after start date. Finding 20th date of the month and 3 days before the last date is matter of simple adding and subtracting number.

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After making helper columns using simple IF function did the job for me. Then I collated the functions in helper column to make a single cell formula. It did the job for me. Later I used pivot table for further analysis.

Thanks!

 

 

 

NPV, IRR and their variants

Net Present Value (NPV), as the name suggest it is the sum of present value of outflow  and inflow cash discounted at a rate. Lets assume some Cashflow (CF) and find out the NPV using discount rate formula

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At a discount rate of 8%, Present Value (PV) factor is calculated and multiplied with CF. The the discounted CF gives the NPV. The same can be achieved by using NPV formula as seen in the screen shot.

Internal Rate of Return (IRR) is the rate at which NPV is zero. If we separately find out the sum of NPV of outflow and inflow using a rate, we will get a value. Using Goal seek function of excel, we set the target value of sum to zero by changing the rate cell, we will get IRR in the rate cell. The same result can be achieved by using IRR function.

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Now that we have learned the basics lets move forward. The NPV and IRR function assume the CF to happen annually, which may not be the case. For that we have functions like XNPV and XIRR at our disposal. Lets assume some random dates and find out the XNPV and XIRR.

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We can observe the difference between two types of function.

People working in Project finance related assignment know that IRR is an optimistic number because the intermediate CF are reinvested at IRR, which may not represent the realty and hence making IRR a highly optimistic or inflated rate of return. To counter this we use Modified IRR (MIRR). MIRR considers both the cost of the investment and the interest received on reinvestment of cash.

Finance rate is the rate at which cash outflow is funded, usually cost of capital. Reinvestment rate is the rate at which intermediate CF are assumed invested, usually a mutually agreed conservative rate. Therefore MIRR represents a relatively fairer rate of return on the investment. Lets again assume some numbers and verify this.

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We can see that MIRR is lower than IRR, when a conservative reinvestment rate is used. MIRR equals IRR when FR & RR equals IRR, which cannot be true in most cases.

But wait, again MIRR assumes annual cashflow, what if CF are not annual. And there is no direct function for it!

This requires a deeper understanding of how MIRR is calculated. Lets recalculate the MIRR in above example.

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As you can see in above screen shot that outflow and inflow are separated. For outflow the NPV is found using Finance rate. For Inflow the future value is found using formula at time period 5. The MIRR is calculated using IRR function with NPV of outflow and total future value of inflow.

We have to use above logic to calculate MIRR with non periodic CF, lets call it Non Perodic MIRR (NP MIRR).

We calculate the present value of outflow using XNPV and future value of inflow using yearfrac function and formula. After getting the value we simply calculate the XIRR of CF, which gives us the NP MIRR. We can see that MIRR and NP MIRR are different.

Link to the file :

https://drive.google.com/file/d/0B2FLZ9YjqpJTMnJ3RGJlT2VSUFU/view?usp=sharing

Thanks!