Question

How can Excel be useful in project economics and finance? Do you know of any other tools that can be used to assist in the analysis and decision making for projects when it comes to economics an finance?

Answer 1

Excel has benefits in Finance and Economics.

In Finance - Especially one has to compute every thing using formula - PV, Duration, FV, IRR, NPV. As and when the data is huge, and at times you have to compute the value using a solver as there is no specific formula one can plug and get the result. Excel does all this effortlessly with in-built functions.

Apart from this, in preparing the financial statements, and cash flow projections, excel is of great help. By changing the values of input parameter, one can easily understand how the out put is changed, and can take valuable decisions.

Pivot charts in excel is wonderful. Large data sets are easily put in graphs and the decisions are cleaarly communicated to vaious stake holders.

In Economics - In exconomics, there is brach called econometrics where lot of regression analysis is required.Excel has various inbuilt functions, which does this computations effortleseely.

Pivot charts, inbuilt fucntions, capability to process decent amount of data makes excel a mandatory tool to learn finance and economics. It is common now a days, all the authors of text books, provide excel explanations on their websites for providing better explanation to the students.

Now a days with the advent of data analytics, artificial intelligence and machine learning, lot of new tools - IBM Cognos, SAP BI, SAS and programming languagaes like R, Python, are giving the tough competition to excel as excel can not handle extremely large data sets, and is usually slow compared to the performance of these tools.

Inspite of all the new tools and languaages, excel still has its place as a begineer tool and a very low cost alternative to the new tools.