Basic Financial Statements

In this part of the Excel Virtual Workshop series we will look at using Excel to create a
couple of simple financial statements, namely the profit and loss statement and a balance
sheet. This will introduce the principles that can be used across a number of different
financial modelling situations.

Profit and Loss

Start Excel and ensure that you have a blank sheet, and enter the following on the sheet:

To achieve the title spanning the columns A1-E1 we need to select them and then use the
merge and center button

Next we are going to start entering the numerical data.

We can format these numbers to appear on screen however you want. Select cells C4-D23
then Format / Cells and select custom.
Select the '#,##0' type and click OK. The numbers should now have been formatted for
thousands.

Next we need to add the missing figures, which are derived from calculating other values.
This done by using formula similar to that we used in Part 1. Enter the following formula
in each of the cells.

Cell Formula Purpose

C7 =SUM(C5+C6) Adds Opening Stock and Purchases...
...subtracts the Closing Stock to get Cost of Goods
D9 =SUM(C7-C8)
Sold
D11 =SUM(D4-D9) Produces Gross Profit on goods sold
D21 =SUM(C13:C21) Adds all the expenses
D23 =SUM(D11-D21)Subtracts expenses from Gross Profit to get Net Profit

Next want to format a few cells, making things easier to read by inserting accounting
lines to signify totals. Select Cell C6, then Format /Cells and then Border tab.

Ensure that the underline box is depressed and click OK. You should now see the
underline in cell C6 signifiying a total. Repeat this formatting until you have a worksheet
which looks like the one below.
Finally we are going to set a print area so that only the data between A1-E23 on the
worksheet is printed (useful if we have other information or graphs on the worksheet).
Select cells A1-E23 and then File / Print Area /Set Print Area. This can obviously be
removed by using File / Print Area /Clear Print Area.

The Balance Sheet

The Balance sheet is similar to the financial statement we have produced above, except
the idea here is to have Assets = Liabilities at the end and thus have the company's
'Balance'. On a new sheet fill in the data as shown.
Next select Cells B5-C24 and format these cells the same way as you did previously, but
choose the '#,##0.00' type this time.

We are now going to add the formulae to the empty cells to generate the final balances.
(Note: creating the 2000 formula can be done by dragging the corner of the adjacent 2001
cell, as done in part 1).

Cell Formula Purpose

B8 =SUM(B5:B7) Adds Current Assets for 2001
C8 =SUM(C5:C7) Adds Current Assets for 2000
Subtracts depreciated value from the original cost -
B11 =SUM(B9-B10)
2001
Subtracts depreciated value from the original cost -
C11 =SUM(C9-C10)
2000
B12 =SUM(B8,B11) Adds Current and Fixed Assets - 2001
C12 =SUM(C8,C11) Adds Current and Fixed Assets - 2000
B17 =SUM(B15:B16) Adds Current Liabilities - 2001
C17 =SUM(C15:C16) Adds Current Liabilities - 2000
B19 =SUM(B17:B18) Generates Total Liabilities - 2001
 C19 =SUM(C17:C18) Generates Total Liabilities - 2000
B23 =SUM(B21:B22) Adds money owed to the owners - 2001
C23 =SUM(C21:C22) Adds money owed to the owners - 2000
B24 =SUM(B19,B23) Produces total owed - 2001
C24 =SUM(C19,C23) Produces total owed - 2000

Once you have entered all the data you should see that the Total Assets and Total
Liablities are the same figure and thus 'Balance'.

Most financial modelling in Excel follows this formula, of creating a layout and entering
formulae to generate totals automatically.