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Unit 42 - Assignment 1 - P1, D1
- Institution
- PEARSON (PEARSON)
Unit 42 Spreadsheet Modelling - Assignment 1. All criteria achieved, P1 and D1. Using Spreadsheets to solve complex problems.
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DC CONSULTANCYAssignment 1
Using Spreadsheets to
solve complex problems
Joel
,Task 1:
I work in the Business Solution department for DC Consultancy and I have been
asked to inform you, at Inter City Sports, how spreadsheets can be used to solve
complex problems.
Spreadsheets are extremely useful for businesses because of how they can use
various functions to carry out a number of complex problems. There are many
different functions that can be used. I will explain to why you should use
spreadsheets to analyse and interpret your data more effectively and how these
specific functions work. Also the reason I recommend using spreadsheets for these
complex functions over other means, like paper for example, is because it is
decreases the chance of any mistakes being made since data can be linked across
spreadsheets. It is also a lot easier to see any mistakes that may have been made if
the spreadsheet it set out in a clear and organised manner.
Cash flow forecasting can be used to record the money that flows in and out of a
business in a certain time period. It is usually set to do this over a year but can easily
be changed to suit the needs of any business. The data needs to be inputted in a
clear manner and it can then be looked at to see how cash is flowing throughout the
business. For example, the incomes and expenses should be inputted into a
spreadsheet. Then using cash flow forecasting you can see if the profits from the
sales each month overcome the money spent each month on salaries, marketing,
etc. Cash flow forecasting is very useful for businesses small and large, it warns you
if the profits are lowering or even going into the negatives. It can prevent liquidation
or even bankruptcy because of how you can see what extra money can be spent on
or if cuts need to be made to increase profits for the future of the business.
Budget Control is a very important aspect of any successful business. It is essentially
just checking your income against any money going out, for example salaries or
buying new equipment. Although quite simple, it is very important because if a
business isn’t staying in their budget range then they are restricting their chance as
being a successful business massively. Using a spreadsheet for this would help
greatly since it can automatically add all incoming and outgoing money using the
“Sum” function. This is a lot more accurate than adding up number manually
because it will not make any mistakes during addition. Also if any numbers need to
be changed, for new salaries for example, then it will automatically change the
answer for the new calculation in the output cell.
What If scenarios are really useful to see how a business would be impacted if
certain aspects were changed within the business. They can be used to try and
analyse what would be best for the business before actually doing it. It allows for
decisions to be made for the business to move in the right direction because of the
supported data that can be calculated with “What if” calculations. The reason What If
scenarios are used is because it would be a very big risk to just go and change
something in the business to see if it works well. So because of this it is a lot more
effective and safer for the business for What If scenarios to be used to see what
would happen if certain things were changed. There are a few tools that can be used
in a spreadsheet for What If analysis. What If scenarios specifically use different
scenarios to see what would be affected in different situations in the business. For
, example, you could use different budget scenarios to see if it would be beneficial to
spend more money on equipment, staff, etc., because this in return could maximise
profits, or to see if it better to save that money instead. Using What If scenarios you
could easily set this up to check incomes using each different scenario.
Sales forecasting is simply the prediction of future sales. They can be made accurate
by using more information for the decisions. The reason that sales forecasting is
used is so that businesses can estimate how well they are going to perform in the
following year or month for example. If the sales are then too low then they can
prepare for that and tackle it appropriately, like increasing marketing funds for
example. In a spreadsheet you can easily carry out sales forecasting to calculate
future sales. The forecasting is usually based on past sales within the business or
sales completed by other businesses. To actually carry sales forecasting out in a
spreadsheet some existing data has to be used. Then using the forecast function, a
prediction will be made in the selected cell. This is a lot more effective than other
methods because it uses all of the past data to come up with an accurate result.
Whereas if you just took an educated guess or tried to come up with a trend yourself
using the data it wouldn’t be as accurate and it would take a lot longer.
Payroll projection is useful for working out how much money needs to be paid out to
all employees. It calculates the employees’ monthly salary using the hours they
worked in that month and multiplying that by their pay rate. Then finally any
necessary payments, like tax, are deducted from this figure and the final salary for
that employee is calculated. Many businesses may want to use payroll projection
instead of outsourcing because it can be cheaper, but it can be more hassle because
you need to keep up with laws. However, for well established businesses that keep
their spreadsheets organised and clear, payroll projection is quite simple and can
easily be done. After this function has been completed you can easily use the sorting
feature to see useful information like who is working the most or who earns the most
in given time periods. Also using a spreadsheet would be a lot more efficient than
working out employees’ salaries on paper. This is because it minimises errors since it
has auto fill and accurate complex functions.
Statistical analysis is basically the collection and examination of data and displaying
that data in numerous different ways depending in what it needs to be used for.
There are many tools in excel to carry out endless evaluations of data. Some of
these include functions for averaging if conditions are met, calculating the mode or
median and calculating the standard deviation on groups of data. There are also
more complex functions in a data analysis add in for excel that includes functions for
creating histograms, ranking and percentile grouping your data, sampling, generating
moving averages and descriptive statistics to name a few. Obviously doing this in a
spreadsheet where it does these functions for you, for new or existing data, on
demand is a lot more efficient and reduces the chance of errors, than doing it
manually on a spreadsheet or paper. The reason that most of these functions would
be used in businesses is because they solve complex problems for you and then
gives you useful information that can then be taken and used for important decisions.
Trend analysis uses past data to predict how the future data will look. It is where you
take two, or more pieces of information and compare them to see if there are any
links between them. A good example of this is in stocking certain products in shops
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