CAT / FIA FMA Syllabus B. Data Analysis And Statistical Techniques - Applications for computer spreadsheets - Notes ^{2 / 2}

Spreadsheets provide a tool for calculating, analysing and manipulating numerical data. Spreadsheets make the calculation and manipulation of data easier and quicker. 

For example, the spreadsheet above has been set up to calculate the totals automatically. If you changed your estimate of sales for one of the departments, the totals will change automatically.

Spreadsheets can be used for a wide range of tasks due to its ability to manipulate a large amount of data very quickly to answer ‘what-if’questions.. Some common applications of spreadsheets are

• Management accounts

• Revenue analysis and comparison

• Cost analysis and comparison

• Budgets and forecasts

• ‘What if?’ analysis / sensitivity analysis

• Cash flow analysis and forecasting

• Reconciliations

Advantages of spreadsheets

• easy to learn and use

• easier and quicker calculation and manipulation of data

• enable ‘what-if’ analysis to be performed quickly

• enable the analysis, reporting and sharing of financial information

Disadvantages of spreadsheets

• since formulae are hidden, the underlying logic of a set of calculations may not be obvious.

• a high proportion of large models contain errors

• a database may be more suitable to use with large volumes of data