Question

Describe data validation, absolute cell referencing, custom formatting, naming a range in Excel. Why is this important for financial modeling? Use examples.

Answer 1

Answer:-

Data Validation:

Data Validation is a very useful and easy to use tool and is used to control what a user can enter into a cell. In data validation one  can restrict the user to enter only a specified range of numbers, text or date.

Absolute cell referencing:

The absolute cell reference in excel is a spreadsheet cell that remains the same even when copied or moved. It can be identified by looking at the formula of the cell. It has the feature to copy a formula into multiple cells. The formula used can be copied anywhere while keeping the same cell value.

Custom formatting:

A custom number format gives the access to change and control the display of numbers, dates and text.

Naming a range:

In naming a range one can select the range and defining name and enter the name one wishes to assign to the selected data range.

These functions are important in financial modeling because when we build the model we are supposed to assign the name the different sheets in model which is important and the application of absolute cell referencing is used to drag the numbers in forecasting for the remaining years. In financial modeling sometimes the data validation can help in inputs without change the whole set of numbers which is used to get different scenarios with feeding different number.