Introduction to Financial Modelling
Principles of Excel as a Modelling Tool
Excel Operations, Structures and Short-Cuts
Introduction to Excel Functions
Applications of Lookup and Reference Functions
Planning and Building Models for Optimal Decision Making

2.1 The Grid Structure of Excel

The Structure of a Worksheet

The basic structure of Excel is that of a worksheet: This is a tabular (or grid) structure, made up of “cells”. The image below shows the top-left part of the grid structure of a blank worksheet:

Each cell has an address, which can be referred to using its row and column: By default, the rows are indexed using numbers, whilst the column index uses letters. For example, the top-left cell is A1, the next cell to the right is B1, and the row below this has cells A2, B2, and so on.

There are 1048576 rows and 16384 columns. Therefore the cell addresses start with A1 in the top-left and finish with XFD1048576 in the bottom-right.

In fact, the number of rows is 2-to-the-power-of-20, whilst the number of columns is 2-to-the-power-of-14. The last column is XFD (no ZZZ, for example): The letters A-Z constitute 26 columns, AA to ZZ provide 676 (26 times 26) , and AAA to WZZ provide 15548 (23 times 26 times 26). The remaining 134 columns are provided by the letter combinations XAA to XFD. (Prior to Excel 2007, there were only 65536 rows and 256 columns, so the total grid area of modern Excel is over 1000 times larger than in those legacy versions).

The Structure of a Workbook

An Excel workbook can be made up of one or of several worksheets (or worksheet tabs). In many cases, it is sufficient to work (or create a model) in a single worksheet only.

However, it can be convenient to use multiple worksheets, especially when each contains data sets that need to be linked to other sources in order to update them.

To add a new worksheet, one can click on the + button, resulting in:

The worksheets can be given a meaningful name (e.g. “main model”, or “data set”) by right-clicking on the tab and using the Rename option. The image shows this step for the added worksheet:

The number of worksheets is limited only by computer memory capacity. However, as a general rule, in order to keep the model transparent and be able to find items easily without having to search and move between many worksheets, it is best to try to use few worksheets, and to add worksheets only for specific purposes only (e.g. for separate and independent data sets). This is discussed later in more detail.

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