Excel best practices

Purpose – Currently many jobs for undergraduate finance majors require that the student demonstrate advanced Excel modeling skills. The purpose of this paper is to illustrate and explain the Excel Best Practices which should enhance their financial modeling efficiency. Design/methodology/approach – The focus is a way to teach the Excel Best Practices when teaching financial modeling with Excel 2007. It uses a chronological modeling procedure that is consistent with current learning theory and the way students should use these Excel Best Practices. A capital budgeting replacement problem is used to illustrate many of the Excel Best Practices. Findings – It was found that using a chronological modeling procedure is consistent with current learning theory. Originality/value – Using the procedures mentioned in this paper should result in efficient financial modeling. Efficient models are created in less time, have fewer errors, if any, and are designed for ease of use.