How to Use Excel for Financial Functions

Use Excel to perform complex financial functions.

Spreadsheets help users to analyze and organize large amounts of data. This is especially true for financial analysis and decision making. Microsoft Excel is one of the most popular spreadsheet applications available. One reason MS Excel is so popular is because of its ease of use with financial functions.

Instructions

1. Determine the problem. Be specific. Excel has many different financial functions, some of which differ only slightly. In this example, you want to determine the accrued interest for a security that pays periodic interest.

2. Use the Financial Functions list to determine which function is best for your problem. Read through each function description to best determine the match (see References). The very first function in the list is ACCRINT, which is used to calculate the accrued interest for a security that pays periodic interest. This is a perfect match.

3. Click on the formula that best matches your needs. Read through the description to understand the variables and how Excel calculated the formula.

4. Define your variables. Each variable is explained in the formula description. Define each variable for your solution and put each variable in a different cell. For instance, the formula for ACCRINT is: ACCRINT(issue,first_interest,settlement,rate,par,frequency,basis). Each formula has different variables so it's important to read the description for the formula you want.

5. Plug your variables into the equation. Copy the formula into the cell where you want to see the answer. Start with the "=" sign. Every formula in Excel starts with an "=" sign. For instance, the formula for adding is: "=sum(number 1, number 2...).

References

• Microsoft: Financial Functions