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Using Spreadsheets To Solve Complex Problems
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Full written Unit 42 Spreadsheet Modelling, All Assignments (three in total), All Pass Criteria Attempted and Achieved
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Using Spreadsheets To Solve Complex ProblemsDC Consultancy working in partnership with Inter City Sports
Dominic Jefrey
Spreadsheets are vital components of any successful business model. A well planned spreadsheet
can be useful for a number of reasons, including (but not limited to) trend analysis, budget control,
cash fow forecasing, and what if scenarios. We can use tools like LOOKOKP, , goal seek, and general
formulae to create a perfect spreadsheet that is presented to requirements. Not everybody knows
what these terms mean or how a spreadsheet can be used to uilise them, so we are here to explain
what they mean to you and your business, and why you should use them.
Oet’s start with cash foo forecasing. Cash fow is like oxygen to a business. Without sufcient cash
fow a business dies. oo a business, cash fow dictates what you can or can’t do, and poor
management can lead to problems. For example, if a business has inadequate income it will not be
able to pay its staf, as a result staf might leave, the business will not be able to aford to hire new
staf, and if the business has no staf there will be no further income of any kind, resuling in the
potenial liquidaion and bankruptcy of the business. ,sing a spreadsheet, we can easily input and
change data to see how things like payroll, tax, waste, and bills afect our cash fow, and use this to
project things like wage percentages.
ohis leads onto budget control. Budgetary control involves regularly comparing real results with
desired results in order to see if the business is performing as well as it should be, and allows us to
plan a strategy to control things like expenditure. ohis is easy to do using spreadsheets, as we can
quickly switch between diferent spreadsheets to compare daily, weekly, monthly, or yearly takings.
We can also organise the spreadsheets into appropriate folders for convenient accessibility and use
staisical analysis (covered later) to compare totals. Budget control is essenial within a business
because without it there will be no understanding of how much we are spending or how much
money we need to make to be able to aford expenses.
We can use “ohat if scenarios” to predict eventualiies and possible outcomes. For example, we
might know that we need to make at least £1200 in a day in order to be able to pay staf and sill
make a proft. But what if we only make £800? We need to be prepared for this, and this is where a
what if scenario is an ideal soluion. ,sing the goal seek funcion (and similar techniques menioned
earlier) within spreadsheets, we can input £800 and see the efect it has on our ability to pay staf
wages whilst sill making a proft, and other complex data. We can then use to this to predetermine
what we need to do to make up the extra £400, such as cut down on waste, buy less stock, or make
more money on another day.
Sales forecasing can be used to predict and control what we stock and sell as a company, and cut
down on wasted space and wasted money taken up by products that aren’t selling. It can also help
with decision making. For example, we can look back on last year’s spreadsheets and fnd a
correlaion between the hot months of the year and our increase in the sales of ice cream. We can
then stock up early on plenty of ice cream before these months begin (knowing that the sales of
these products will increase soon), and then using the same logic stop ordering ice cream around the
ime the sales of ice cream declined last year. ohis is similar to “trend analysis” which will be covered
later.
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