Excel and Money

Excel has a number of features designed specifically for working with financial data. These are, of course, particularly relevant to this book. This section reviews these features.

Cash Flow

Excel uses a cash flow model for dealing with financial data. This is a lot simpler than it sounds, and means simply that money values are treated as positive values if the money is coming in and negative values if it is going out. For example, suppose you are using the PMT function to calculate the payment on a car loan. The amount of the loan must be entered as a positive value because this is money you receive. The result of the calculation is a negative value because this is money you pay out—your monthly payment.

This way of doing things seems counter-intuitive to some users, but there’s a good reason for it because it makes things consistent when you are creating a large, complex financial worksheet. I’ll remind you about cash flow as needed for using the templates.

Taken From : Manage Your Money and Investments with Microsoft Excel

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