5 Must Know Excel Shortcuts

There is one word for improving your efficiency in Excel. Shortcuts. In laymen terms shortcuts allow you to perform tasks quickly using your keyboard. This blog looks at 5 Must Know Excel Shortcuts which will help you improve your efficiency in Excel.

 NOTE: You can follow see how the shortcuts work yourself by downloading the accompanying Excel spreadsheet and YouTube video in the above Blog Downloads area. 

 Shortcut 1 - The Grandfather

The first must know shortcut is quite literally the grandfather of all shortcuts. It sits at the top of the family tree and gives you access to numerous 1^st and 2^nd generation shortcuts.

What is it?

ALT + LETTER – gives you access to the Menu Ribbon – See Figure 1

Figure 1: ALT+LETTER

Notice the letters which pop-up in Figure 1, once the ALT key is pushed. If you push anyone of these letters then you will go into that menu. For example pushing “N” will take you into INSERT menu.

If you follow on the initial letter with another letter corresponding to an action, then that action will be performed.

Shortcut 2 – Charting at the Touch of a Button

Want to insert an Excel chart at the touch of a button? Well, all you need to know is:

F11 – Charts the selected cells

 Select the cells you want to chart and then press F11. It really is that simple.

Shortcut 3 - Finding your way

Navigating through Excel sheets is made easy with this shortcut. Simply press:

    -       CTRL+PAGE  DOWN – move one sheet to the right

 -              -      CTRL+PAGE UP –move one sheet to the left

 No more having to click from sheet to sheet, ensures you’re saving time.

Shortcut 4 – The Go to Guy for Auditing

This is one of the best shortcuts for flying around the Excel layout and helping you audit your model or spreadsheet.

 F5 - (1) takes you to a highlighted formula; or (2) take you to a named range or cell

 For example if you have highlighted a particular input in a formula, you can press F5+ENTER and it will take you to that input. Also you can just press F5, select any named range or cell and press ENTER. Excel will navigate to that particular named range or cell.

You can also use F5 to perform another nifty trick. When tracing precedents or dependents you can press F5+ENTER and you will go back to the previous traced cell.

Shortcut 5 - We’re not sure if this is technically keyboard shortcut

Some might say that shortcut 5 is not technically a shortcut. They may be right; however it can cut down the time taken to perform tasks such as formatting. Enter the:

APPLICATION KEY (although we like to call it the LIST key) – basicallyacts like your right mouse button

Having the LIST key means no more having to take your hand off the keyboard. The list key is shown in Figure 2.

Figure 2: Picture of the Application Key (doesn’t it look like a LIST with a mouse cursor on it?)

Figure 3 shows the display after the LIST key is pushed. As you can see, there are a number of items which can be performed.

Figure 3: Display after LIST key is pushed

If you like this article, check out our Excel Shortcuts training course which has plenty more tips and tricks.

 

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Car Indicators – How they can help you model in Excel

How could flickering car indicators possibly help you model in Excel. All will be revealed below.

On, off, on

Think about what happens when you put your car indicator on. The light flicks on, then off, then on and so on, right? A similar concept can be used in Excel modelling to simplify often quite complex problems.
Introducing binary indicators. Similar to car indicators, binary indicators turn on and off. If you’re not familiar with the world of binary operators then below is a brief description. When a binary operator is equal to:

• 1 it is on – an illuminated car indicator
• 0 it is off – non-illuminated car indicator

Yeah, yeah, that is great, but how can these binary indicators help me in Excel? Well let’s take a look at a couple of examples.

NOTE: You can follow these examples yourself by downloading the Excel spreadsheet and watching the YouTube video.

Example 1

Imagine you’re asked to model construction costs for a project based on the following assumptions:

1. Construction costs are $500,000 per month
2. The construction period runs for 2 years from 1 January 2011 to 31 December 2012

How would you go about modelling this in Excel? Some of you may say that’s easy… I would just do the following formula:

=500,000 x IF(AND(1 January 2011<=31 December 2012),1,0) or IF(AND(1 January 2011<=31 December 2012),500000,0) – see Figure 1

 

Figure 1: Long and cumbersome formula for Example 1

Whilst this works, the formula is long and cumbersome. This can cause troubles for external parties such as model auditors, may cause you to lose your mind trying to work out what you did previously and the construction IF statement cannot be used again in other formulas (you will see what we mean in a second). Don’t despair we can break this down into much more manageable components as follows:

1. Input the assumptions Construction Cost per month, Construction Start Date and Construction End Date
2. Create a Construction Indicator line: =(1 January 2011<=31 December 2012). Notice that we have got rid of the AND logical function. The new formula will create a one when the formula is true for both of legs and a 0 when at least one of the legs is false. Note that this Construction Indicator can be used in other construction period formulas (hence this construction indicator can be referred to over and over again)
3. Construction Costs: Multiply the Construction Cost per month by the Construction Indicator created in (2)

See Figure 2 for the above workings.

 

Figure 2: Simpler and easier to understand solution for Example 1

What do you think? Is this a lot easier to understand than the original formula? Let’s take a look at another example.

Example 2

Our next example asks us to sum the number print media sources from an online survey. See Figure 3.

 

Figure 3: How’d you find out about us categories

How do we solve this problem? Let’s use our binary indicators (aka car indicators) in conjunction with an OR function. Noticing that there are only two print media sources we would input the following formula:

= OR(How’d you find out about us data=”Newspaper”,How’d you find out about us data=”Magazine”)*1 – see Figure 4

You’ll note that we have multiplied the OR function by one. This is because the OR function alone will only return TRUE or FALSE. If we multiply the OR function by 1 then we will get 1 for TRUE and 0 for FALSE.
Now copy and paste this formula down. Add all the 1’s using the SUM function and you’re done. You should end up with something similar to Figure 4.

 

Figure 4: Solution to Example 2 along with formula for OR function

You now know how many print media sources are included in the survey.

NOTE: Example 2 could have been solved using a COUNTIF function; however that’s a topic for another day.

So now you see. Those flashing things called car indicators really do help you to model in Excel.
If you like this Blog, check out our Excel Functions training course which has plenty more tips and tricks.

Mini-Perms in Project Finance

In this blog tutorial the Video Financial Modelling team dives into the world of mini-perms. And no we are talking about those 80’s hairstyles. 

What are Mini-Perms?

Mini-perms are lending instruments which are intended to be refinanced out after a short timeframe usually 5-7 years. A number of project finance and PFI deals have been done using a mini-perm financing structure given the lack of liquidity in the long term lending market post the GFC. In this tutorial we will look at why mini-perms are being taken up, the different types of mini-perms and the issues related to these instruments.
Why are mini-perms being taken up?

Mini-perms have been promoted by banks, in a large number of financial markets, including in the UK PFI market. The main reasons for their use include:

       i.           concerns over long-term liquidity – an example of this is the introduction of Basel III outlining a global regulatory standard for capital requirements;

      ii.          the banks’ inability to underwrite and syndicate deals, with the resultant dependence on bank clubs for funding. i.e. banks are being forced to lend and hold; and

     iii.          a certain degree of opportunism among those banks still in the market.

Where there is limited liquidity for deals, banks prefer mini-perms given the short term over which they can amortise their arrangement fees. In addition there are fewer active lending banks in the post GFC world (i.e. less competition), hence there where a process isn’t competitive or there is limited appetite banks can dictate there terms.

 

Types of mini perms

There are typically two types of mini-perms a hard mini-perm and a soft mini-perm. We will look at each in turn.

Hard Mini-Perm
A hard mini-perm is a short term loan that mimics a longer term amortisation profile, but with a bullet repayment at the end of the tenor. Legal maturity of this instrument is typically around 5-7 years, forcing the borrower to refinance before maturity or face default. The main disadvantage is the default and refinancing risk for all stakeholders (funders, borrower and Government), which in a PFI deal may mean the termination of the Concession.

Soft Mini-Perm
A soft mini-perm is a long term loan with a mechanism to incentivise the borrower to refinance after an initial short period usually 5-7 years. Two methods for incentivising the borrower include:

1)      ratcheting up margins post the initial period; and

2)      using a cash sweep post the initial tenor

A soft mini-perm is a structure without the default risk of a hard mini-perm, where the loan maturity remains long-term. The soft mini-perm has been used in UK PFI and continues to be promoted by banks on a number of projects.

  Mini-Perm Financial Modelling

Let’s look at some examples of mini-perms assuming the following inputs. You can follow along by downloading the spreadsheets and youtube video. Also note that this analysis assumes that there are no refinancing fees etc.
For all scenario below we use LIBOR of 400bps, and an ongoing CFADS of 1,300 per month.
Hard mini-perm: 5 year initial tenor, bullet at maturity, amortisation profile mimics 20 year tenor, margins 250bps and a credit foncier repayment profile. Note that a credit foncier repayment profile is like a home loan mortgage with fixed instalments. See our tutorial, CFADS and DSCR sculpting, which goes into the credit foncier repayment profile in depth.

Using the actual margins for the hard mini-perm we get the following.

 

As mentioned the hard mini-perm is only short term debt and hence has no margins post the initial tenor. Borrowers usually have to estimate the margins post this short term debt tenor. Note that given the short legal tenor of the facility, the borrower must refinance the loan at the end of the initial tenor.

If the borrowers were to assume that the margins continue at 250bps we would get a normal credit foncier profile as per the below. Given the constant CFADS we would get a DSCR that is constant.

 

Soft mini-perm: 20 years, margins 250bps then ratcheting up to 500bps post 5 years

As you can see in the below the rachet up in margins after the initial tenor of 5 years causes the debt service to increase in mid 2016. With a constant CFADS this margin rachet would decrease the DSCR and eat into potential equity distributions.

 

Given the high debt service post margin rachet (and the likelihood of these rates occurring) borrowers usually assume different margins post the margin rachet. If we assume that the margins continued at 250bps then we would have the exact same profile as in the hard mini-perm assumed rates case.

 

As you can see from the above although the dynamics of soft and hard mini-perms are quite different it could be that borrowers could assume the same financial forecasts, particularly with respect to debt service modelling. One should note however, that the hard mini-perm is inherently more risky given the refinance/default risk. Now let’s look at a number of issues which occur with both hard and soft mini-perms.

Issues with mini-perm structures
 
There are a number of issues which borrowers face with mini-perm structures. These include:

i)                 Hedging: do you put a short term swap in or long term swap? Short term swaps will face refinancing risk on the underlying rate, usually LIBOR. Long term swaps assume a certain repayment profile which may change over time;

ii)                Affordability: what assumptions do the stakeholder (predominantly the borrower and the Concession grantor) make about margins, underlying interest rates, tenor and amortisation profile;

iii)               Sharing of risks: who takes the risk on margins, underlying interest rates, tenor and amortisation profile?

The above issues are resolved on a project by project basis.