This is a phenomenon that everyone who has worked in Financial Analysis knows and dreads. If you haven’t done that, chances are you are not going to be able to fully comprehend the horror of the situation that I am going to describe, so you’ll just have to take my word for it.
You have just finished your work. It might be the spreadsheet with the company’s Annual Budget, or the CashFlow, or an Investment Plan evaluation. No matter which is the method that you have used (the “Monthly Average” method, or the “Net Present Value” method, or the “Internal Rate of Return” method), you know that there are problems and inaccuracies in the method to begin with, and that, thru no fault of yours, many of your figures are not a product of a solid calculation, but of a compromise of sorts. In order to remember that you have done this assumption or that maneuver, you have colored these cells with yellow, and those cells with red, and the other cells with green and so on. You have filled the cells with comments, hoping that when you will use the same spreadsheet again they are going to help you remember what assumptions you used. The end result is a motley looking spreadsheet.
The horror begins to kick in, when you need to update your work after a month or more. In order to factor in some new business moves, you must remember and understand which of the assumptions you have built into the previous month’s work are no longer relevant and need to be removed, and which ones need to be changed. You hope that the different colors will give you hints about what needs to be done, but you can never be sure. And even if they do, the size of the worksheet is so enormous, that you cannot really check every formula in every cell to see if there is an error.
But the biggest horror of them all, is when you go to a new job, and you inherit from your predecessor the multicolored spreadsheet of the company’s Budget or the CashBudget or so. You can spend countless months trying to understand the logic behind every formula, and still you will never be absolutely sure that you fully comprehend what’s going on. Your first reaction when you see what you have inherited is to throw everything to the waste basket, and start everything from scratch. However, that option exists only if you have just been appointed as the head of the department. If not, then you are going to continue, using the previous way of working. But even if you are the head of the department, it will take several months to create all that work from scratch. In the meantime, you still need to issue reports, so you really must continue working in the old multicolored spreadsheet, that’s sitting in your screen, ready and waiting for an opportunity to pounce at you, and shred your mental health to pieces.
I am not going to deny the huge revolution that the spreadsheet brought to the world of Financial Analysis. However, the quantity of the work, currently has reached a monstrous size. Every Financial Analyst wishes that there was a better way to do those tasks. Actually, there is one, and we are going to see it shortly.
Stick around, and we are going to see the things that Accountants have, and Financial Analysts can only wish and dream they had.