excel tables and simple charting financial...
TRANSCRIPT
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 1
Chapter 3
Excel Tables and Simple Charting
—Financial Tables
Objectives of this chapter
3.1 Mathematical Operations and formulas
3.2 Construction of a Financial Table I
3.2.1 Construction of a financial table
3.2.2 Copying, Printing and saving the Table
3.3 Construction of a Financial Table II
3.3.1 Theoretical background
3.3.2 Steps of Constructing a Financial Table II
3.4 Simple Charting
Extended Examples Chapter 3
Objectives of this chapter:
3.1 Mathematical Operations and formulas
In this section, we will first discuss the basic mathematical other operations in the
spreadsheet environment, and then explain in detail the three methods of entering a formula, four
methods of editing a formula, and how to construct a table, using a financial statement as an example.
3.1.1 Entering and editing formulas
The mathematical operators in Excel are listed in Table 3.1a. For example, we enter number 2 in C1
and 4 in D1. Enter the formulas of D4:D12 into C4:C12 as formula (see the process of entering a
formula in Steps 1.3a), producing the results shown in column F. All the formulas should be
preceded by an equality sign, so as to let Excel know that it is a formula, not a text. On the other
hand, if you want to enter a formula as a text, instead of as a formula, you should make a space (or
an apostrophe ‘) before the equality sign, as in D4:D12. When you enter a formula, you may enter the
number directly, like =2+4 in cell E5. In this case, the numbers are fixed. You may also use cell
names, like D4:D12, to represent the numbers in the cells. In this case, if the numbers in C1 and D1
change, the results also change. Reproduce the table and change the number in D1 to 6 and that in D1
to 2, and get the feeling of the use of formula.
Three ways to enter the formula
When entering the formula, say =C1+D1in cell D5, there are three ways to enter the formula:
(1) The Direct Method You may type the cell addresses C1 and D1 directly, as in Table 3.1a. In
this case, you have to identify the cell address each time.
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 2
(2) An intuitive method is using the pointing method, that is, you enter = sign first, move the pointer
to click C1, enter + sign, and then move the pointer to click D1. When you finish, press the Enter
(Return) key. In this method, you do not need to identify the cell address each time.
(3) You can also use the formula palette, that is, use the fx button on the left of the formula bar, but
we do not recommend this for general formula, like mean and variance. This method may be useful
for not commonly used functions like index, Student t distribution, lookup functions, etc.
Note that, % in row 4 means 1/100 (move the 0 in the numerator if % down). Thus, 2% =
2/100 = 0.02. Row 10, the operator & denotes joining texts or values in two cells. Thus, since 2 in C1
and 4 in D1, when they are joined, we have 24. Similarly, =E10&E11, will return 24False. Rows 8
and 9 are logical comparisons. The equality and inequality equations,1 formulated as in rows 11 and
12, give results as either False or True.
HO Practice 3.1a: (a) Enter formulas in D4:D12 as shown. (b) Using the direct method, enter the
formulas in D4:D12 to get the same results; (c) Using the pointing method, enter formulas in D4:D12
into E4:E12. Make sure you get the same results as shown in F4:F12. (d) Change the numbers to 111
and 222 in B1:C1 and see what will happen to the results. The results should show that the value in
the cells has changed accordingly. #
Table 3.1a Precedence of operations
A B C D E F
1 2 4
2
3 Operation Operator Example Result Presedence
4 1 Percentage % =C1% 0.02 1
5 2 Exponentiation ^ =C1^D1 16 1
6 3 Multiplication * =C1*D1 8 2
7 4 Division / =C1/D1 0.5 2
8 5 Addition + =C1+D1 6 3
9 6 Subtraction - =C1-D1 -2 3
10 7 Text joining & =C1&D1 24 4
11 8 Comparisons =, <, <=, <> =C1 =D1 FALSE 5
12 9 Comparisons >, >= =C1> =D1 FALSE 5
The last column of Table 3.1a shows the operator precedence. Exponentials and % are operated
first, then the multiplication and division, then addition and subtraction, and lastly, the text joining
and the logical comparison. To avoid confusion, it is recommended that the parentheses should be
used. For example, in case =B1/C1+C1, Excel calculate B1/C1 first and then add the result to C1.
However, it is clearer if the formula is written as =(B1/C1)+C1.
If you need to edit (or correct) a formula in the cell, there are four ways to do so.
in Table 3.1a, and select the cell, which contains formula.
1 <> means “Not equal.” Hence, in the ` =C1<>D1 will return “True.”
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 3
(1) Move the pointer to the cell, B2, which has a
formula.
(2) Formula bar method: Select B2. Formula will
show in the Formula bar. Click the formula bar, and
edit the formula in the formula bar. Add +C1. /Enter/
when finish.
Steps 3.1a Editing a formula in a cell U=250
Objective: B2 has formula =A1+B1. Change to A1+B1+C1
1
2
(3) Edit key method Press /F2/, which is the “Edit”
key, and edit the formula directly in the cell. Move
the pointer after B1 and add +C1. /Enter/ when
finish.
(4) In-cell Editing method Double click the cell
and edit directly in the cell. Same as Step (3). /Enter/
when finish
3 4
(5) Insert function method Delete the
content of B2 and start over. Click the
insert function button . “Insert
Function dialog box appears. Select
/Select a function:/[Sum]/. “Function
Arguments” appears. B1 will be default.
Click the boxes below and click cell A1
and then cell C1. A1 and C1 will be added
as shown. /OK/. 11 will come out in B2.
(6) If the insert function method is used,
when B2 is double-clicked, the Sum
function will show.
5
6
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 4
We recommend (4) In-cell editing method, which edits the formula directly in the cell. If the formula
covers the adjacent cells, then use the formula bar method.
HO Practice 3.1c: In Table 3.1a, enter 10 in E1 and 5 in F1 (different cells). (a) Change the
reference cells in D4:D12 to E1 and F1; (b) Change the formulas in E4:E12 as in D4:D12, using the
in-cell editing (I); (c) Do the same as (b) using the In-cell editing (II); (d) Do the same as (b) using
the formula bar method. (e) Enter the reference cells C1 and D1 in G2 and G3, repeat the above
experiments for 10 in G2 and 3 in G3. #
3.2 Construction of a Financial Table I
We have seen the random function in (1.3.1) and have generated a range of random numbers in Step
five of Steps 1.3a. They show 6 decimal points in the cell. In fact, the variable =Rand() can yield a
15-digit random number (the default) ranging from 0 to 1. This can be seen by selecting the random
number cell and clicking /“Home”/Number, Increase Decimal/ buttons. Click the Increase Decimal
button until zeros appear at the end
0.904/534/958/553/659/000/000
where / is added for clarity. You can count that the effective number will end at 15th digits.
Let k be a constant, and write
=rand()*k. (3.1.1)
Let k = 100, and enter =rand()*100 in B2. This will generate a random number ranging from 0 to 100.
The number of digits in a cell depends on the width of the cell. In general, we have an eight-digit
random number. In addition, we may click the “decreasing decimal” button to reduce the number of
decimals.
We now use the random function introduced in (3.1.1) to construct a financial table of Total
Revenue, Total Cost, and Profits for the GiGo Company from 1980 to 2000. Formulas may be
entered in upper case letters or lower case letters; in the latter case, Excel will change the letters to
upper case automatically.
3.2.1 Construction of a financial table
We first define.TR (Total Revenue), VC (Variable Cost), FC (Fixed Cost), TC (Total Cost).
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 5
(2)* A3 has column title “Year.” To enter the row titles (A4:A18),
enter 1980 and 1982 in A4:A5 first, then select A4:A5, and use the
fill-handle box (Step (3) in Fig. 1.3a) to drag down the fill-handle
to fill the numbers from 1980 to 2008. Note that, you have to
select two cells, A4 and A5, together so that Excel will know the
interval between the two years; in this case, the interval is 2. In the
table, in order to save space, we cut the years from 1982 to 2004.
We use an arrow to show where the interim data are hidden.
2
(3) Before we go to the next step, we use
the “Justify” command (see Steps 2.3b) to
correct the table title, by moving “GiGo
Company” down to row 2, as shown. To
use the “Justify” command, insert a row
below row 1. Select A1:F2, and use
/“Home”/Editing, Fill!/Justify/. “GiGo
Company” is moved from A2 to B2. If it
does not move automatically, edit it and
make adjustment.
For clarity, enter the bottom border
between rows 2 and 3, and the thick
bottom border between rows 4 and 5.
3
Notes:
a. Row 2 is aligned to the middle of each cell (/“Home”/Alignment, Center/). You may
change the size of font in B2 to 8 points (/“Home”/Font, Font Size/ [8]) or 7 points (the
default is 11 points) to fit the column width.
b. Select A1 and press /F2/ to change the cell to the /Edit/ mode. Then, use the mouse to
select “GiGo Company” and put it in italics and a bold font. (GiGo = Garbage In Garbage
Out, since we use random numbers!).
(1)* Enter The table title (row 1) and the
column title (rows 2 and 3). Note that
entries in row 2 should be text, not
formula.
Steps 3.2a Construction of a Financial Table (I) – Using Random
Numbers Objective: Construct a table as shown in Table 3.2a
1
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 6
(4)* Enter the formulas given in rows 6 to
10 in row 5 as shown by the arrow.
Use the pointing method to enter the
formula in E5 and F5. As row 3 shows,
formula can be entered in capital or small
letters. Note that the numbers in row 5 may
be different from yours or the following
tables (Why?).
4
(5) After filling row 5, select B5:F5 and use
the fill handle to fill the range B5:F19. (Step
3 of Steps 1.3a). To save time, always
remember to enter the formula in the first
row of the data table first and then copy
the row down to fill the rest of the rows. Do not waste time by copying/typing the
formula column by column.
Add heavy line at the bottom of the table to
show the end of the table.
5
(6) In B20, enter the formula
=average(B5:B19)
and use the fill-handle to copy it to
C20:F20.
Adding a separate line between rows
19 and 20 complete the data entry.
U=250
6
(7) Select B5:F19, and use decreasing decimal to
show two decimal places. Select F5:F20 and click
/“Home”/Number, $/ to add the $ sign to the
profits column.
Adjust the column width to make them
evenly distributed.
Note that negative numbers are enclosed
in parentheses.
7
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 7
Remarks on Steps 3.2a: Construction of a Financial Table (I) – Using Random Numbers.
(a) In Step 1, enter the frame of the table first, either starting from the row (Step 1) or from the
column (Step 2). Tables must have a table title (Step 3). The formula row, row 3 is optional, for your
own reference only.
(b) In Step 4, always enter the formula in a row, in this Example, row 5, first.
(c) In Step 4, Formula can be entered in capital letters or small letters. In the latter, Excel will
change them to capital letters when you press the return key. No space is allowed in any Excel
formula.
(d) In Step 8, the borders and color are added only after the all the data are entered in the table.
(8)* To color TR and TC columns, use
/“Home”/Clipboard, Format Painter/ (click
the button twice) brush to color the TR and TC
columns in the same light blue color (see item
15Format Painter of Step (1), Section 2.2.1).
Color Profit column in yellow.
Enclose the data part, B5:F19, and the
average row, B20:F20, with a thick box border
(enter /“Home”/Font, Border!/Thick Box
Border/).
8
(9) In row 21, write your name and affiliation
as shown. Click A21 again and select your
name. Click /"Home"/Font, B/ to add bold
(B), and italics (I) and underline (U) to your
name.
9
(10)* Use “Justify” (see Steps 2.3b) to justify the long note in row 21. Edit if needed. This
completes the construction of Table 3.2a.
#
10
Table 3.2a Total Revenue, Total Cost, and Profit
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 8
(e) In Step 10, press the F9 key (the “Recall” or recalculation key) several times to enjoy the
changes in numbers. The number changes because we entered the formula of the random numbers. #
3.2.2 Copying, Printing and saving the Table
(1) Copying We preserve the original table by copying the table from Sheet1 to Sheet2 by
a. selecting whole Sheet1: /^A/^C/ and click /Sheet2/ tab, then, /A1/^V/ (click A1 in Sheet2
and Insert). We use the old table in Sheet1 (Sheet2 is used for backup).
(2) In Sheet1, to change the random numbers to fixed values, select B5:C19, and enter /^C/. and
/“Home”/Clipboard, Paste!/Paste Values/.
Now, when /F9/ is pressed, the numbers will not change. To make sure we have values in B5:C19,
click any data cell in B5:C19. There should be no formula in the formula box.
(3) Click /Office/Print/Print Preview/) to preview the table. Click Print to print out the table. Save
the file (1.1.2).
This completes the construction of Table 3.2a.
3.3 Construction of a Financial Table II
In Table 3.2a, we enter the data as random variables. In this section, we would like to enter data as
formulas and use the definition of mathematical operators in Table 3.2a.
3.3.1 Theoretical background
As in any Microeconomics or Business Management textbook, we define the following equations for
a business firm. Let the inverse demand2 function (which is the same as the average demand
function3) be p = 40-Q. Then the total revenue is, by definition, price (p) multiplied by quantity (Q);
thus,
TR pQ = (40-Q)Q. (3.3.1)
Let the total cost function be
TC = Q
3 – 12Q
2 + 60Q +20. (3.3.2)
In these two equations, output Q, the variable on the right-hand side, is the independent variable, and
the variables on the left-hand side, TR and TC, are the dependent variables. The definition of profit
is = TR – TC. As shown in Table 3.3a, output Q ranges from 0.0, 0.5. … 10.0, which we label as
output level i in column A. For example, Q2 = 0.5, Q3 = 1.0, etc. Similarly, i (denoted as Profit in
2 It is called inverse demand function since the demand function is generally written as Q = 40 – p, in which p
is an independent variable, and Q is a dependent variable. See Chapter 3. 3 From (3.3.1), AR = TR/Q = pQ/Q = p.
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 9
the table) is the profit at the ith output level, i = 1, 2, …, 21. Marginal profit (mI, denoted as
mProfit in the table) is defined as the profit per unit of output produced at the output level i, that is,
mi = 1
1
ii
ii
, (3.3.3)
where Qi indicates the ith output level, i = 2, 3, …, 21. Qi-1 is the (i-1)
th output level, or output at the
previous level. Thus, Qi - Qi-1 is the difference of outputs between the consecutive levels.
3.3.2 Steps of Constructing a Financial Table II
We would like to implement these equations as in Table 3.3a. The presentation is slightly
different from Steps 3.2a. The reader can choose the method most suited to her/his disposition.
(1)* Enter The table title (row 1), the
formula (row 2), and the column title (rows
3 and 4). All are similar to Steps 3.2a and
Table 3.2a, except that we have the
independent variable Q in column B.
Anticipating drawing a chart later, we leave
B4 blank.
Steps 3.3a Construction of a Financial Table – Using numbers
Objective: Construct a table as shown in Table 3.3a below
Leaving B4 blank to show Excel that
Q in column B is the independent
variable (on the horizontal axis).
1
(2) In cells A5:B6, Enter 1, 2 and 0.0 and 0.5, as shown.
Select A5:B6, and use fill hand to fill the range A7:B25.
This gives the frame of the table, with an equal output
interval of 0.5 unit (you may take any other unit,0.1
or 1.0 unit also).
For clarity, add thick bottom border between
rows 1 and 2, bottom border between rows 4 and 5.
2
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 10
Remarks on Steps 3.3a Construction of a Financial Table – Using numbers
(a) In Step (1), if graphing is not expected, Q can be entered in B4 and delete row 3. Row 2 may also
be deleted.
(b) In Step (4), by now, the reader should know how to enter the formula in Excel from the given
formulas. In cell C5 we enter the TR formula (3.3.1), =(40-B5)*B5. To repeat, select C5 and type
=(40-B5)*B5. While still in C5, with the pointer blinking immediately after the *, use the mouse to
click on cell B5. B5 should appear after the * just as if you had typed it. This B5 in the formula
represents the value of the variable Q at output level i = 1. That is, the column B5 to B25
represents the variable Q, and each cell in the column represents the particular value of Q at i, say, Qi,
where i = 1, …, 21, respectively In particular, the value in B5 is a particular value of variable Q. This
(4)* Using the pointing method, enter the formula
shown in row 2 into C5 and D5, and profit formula
in E5. Note that the numbers in row 5 should be
the same with yours or the following tables.
(5)* Select C5:E5, as shaded area in the table, and
click the fill handle twice, the range C6:E25 will
be filled automatically.
(6)* Since mProfit should start from F6, enter the
formula in F6 as equation (3.3.3) (also see Step (9)
below). Select F6, and click the fill hand twice,
F6:F25 will be filled with the formula in F6
automatically.
5
6
4
(7)* Add a thick bottom border at the end of the
table (in this case, between rows 25 and 26. This
will give a feeling of the table.
(8) To highlight the point of your observation or
analysis, like change of marginal profit from
negative to positive, or positive to negative, you
may add color or boxes around the cells or rows.
(9) We add the formula of the first cell of each
column at the bottom of the table for future
reference or for checking (by the instructor).
Instead, you may add data sources for a formal
presentation.
8
9
Table 3.3a Financial Table of the GiGo Company
7
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 11
method of representation is very important and will be used repeatedly. Press the return key. 0.0
should appear in C5.
(c) In cell D5 of Steps (4) and (5), enter (3.3.2), as =B5^3-12*B5^2+60*B5+20. In E5, entering
profit =C5-D5, and using the fill-hand, copy row C5:E5 down to C25:E25.
(d) In Step 5, instead of clicking fill-handle twice (this is a new feature), we may click and drag the
fill handle down to E19.
(e) In Step (6), leaving F5 blank, enter the marginal profit (3.3.3) in F6: =(E6-E5)/(B6-B5). Then,
select F6, and click the fill hand twice, we have filled the range F7:F25 with the formula in F6. #
HO Practice 3.3a Reproduce Table 3.3a. #
3.4 Simple Charting
While we will discuss the method of Excel graphics in details in Chapter 4, a simple use of chart is
helpful in visualizing the variables in Table 3.3a. In fact, one of the most useful features of Excel is,
in addition to organizing and summarizing the data easily into tables, it can also show easily the
characteristics of the data by charts. Our purpose here is to draws the chart of Table 3.3a and find the
relations among TR, TC, Profit, and Marginal Profit. The chart is produced in Fig. 3.4a, You can see
that the feeling about the data from the Table 3.3a is quite different from that from Fig. 3.4a.
To start the chart drawing, we first select the data range, and enter
/“Insert”/Charts, Lines!/Line (the first line box)/ (3.4.1)
Steps 3.4a Simple Charting Objective: Construct a chart from Table 3.2a
1
(1) To draw the chart, we select the data first,
namely, select B4:F25, including the column
labels in row 4, and click (3.4.1).
3
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 12
(4)* When the chart is clicked, it will be enclosed with thick borders, see the
arrow pointing the border.
(2) The four lines will appear
automatically as shown. When the
pointer moves inside the chart, it
changes to a fat arrow with black
four- arrow cross.
(3)* The chart is enclosed with
borders, with triangularly formed
three-dot at the four corner, and with
lined three dots on the side. They can
be clicked and dragged to expand or
reduce the chart, similar to a text
box, see Step (5) of Steps 2.4d.
2
3
(5) When the chart is selected, /“Drawing Tools”/ tab appears on
the title bar, which comes with three new tabs: “Design”, “Layout”,
and “Format”. Click the “Design” tab, we have the Design ribbon,
as shown above.
(6) In the Design ribbon, click /Chart Layouts!/ (see the arrow).
12 Chart Layouts appear. See the left dropdown box.
(7)* In the Chart Layouts panel, choose Layout 10, the circled
one.
7
5
6
7
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 13
`
(13) When the pointer clicks the inner part of the chart, the chart will be enclosed with borders with 4
empty circles 4 empty squares. The enclosed area is called the plot area (as distinguished from the
Chart Area). Click square a, the pointer changes to two headed fat arrow. Drag the right border to
the right to cover the space.
(8) The panel disappears and the chart will appear
as the one at left.
(9)* Double click each of the three titles and
enter the following words: “Chart Title” changes
to “Profit Maximization,” “(vertical Axis Title”
to “Output”, “(horizontal Axis Title” to “TR, TC,
Profit”, as shown on the left.
9
10
8
(10)* Move the pointer close to one of the vertical lines until “High-Low Line 1” appears
and the pointer changes to a fat arrow. Click /LM/ to select the line. All the outer lines will
show circles at the both ends of the lines, indicating that they are selected. Enter /Delete/ key
from the keyboard to delete all the vertical lines.
(11)* Click the chart, and
/“Insert”/Illustration,
Shapes/ and choose the
line and arrow to indicate
the point of the maximum
profit.
(12) If line labels are
given, we don’t need the
legend. Click the side of
the legend and /Delete/.
8
a 13
11
12
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 14
(15)* To create a copy of the TR text box, click the TR box. Holding the Control Key, use /LM/ to
drag the box closer to the TC curve. Click inside the Text Box and change TR to TC. Do this for
mProfit and Profit labels.
This completes the charting steps of Fig. 3.4a. #
Remarks on Steps 3.4a Simple Charting
(a) At Step (3), you may stop the charting or do so at Step (10) if you are only interested in the
shape and relations among the curves.
(b) In step (7), we choose Layout 10 since it comes with three titles. Titles can be added manually by
/“Chart Tools, Layout”/Labels, Chart Titles/ or /Labels, Axis Titles/. Title boxes work like Text
Boxes.
(c) In Step (9), you may choose the color of the lines from
/“Chart Tools, Layout”/Chart Styles!/
(14)* To enter a text box in the chart,
click the chart, and /“Insert”/Text Box/.
Move the pointer into the chart. The
pointer changes to upside down cross.
Click anywhere in the chart once. The
text box appears and enter TR. Click a
border of the text box and drag it closer
to the TR curve. (See Steps 2.4c and d).
Note: To find out which curve is
which, lick a curve, if it is MR, the Q
and MR columns in the table will be
enclosed by borders, separately.
U=250 1
14
15
Fig. 3.4a Profit maximization
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 15
(d) In Steps (11) and (14), if the chart is not clicked first, all the shapes will not “stick” to the chart,
that is, if the chart is copied or moved, the shapes will not copy or move with the chart.
(e) In Step 15, more chart editing will be introduced in Chapter 4. #
HO Practice 3.4a Reproduce Fig. 3.4a Profit Maximization. #
Extended Examples Chapter 3
For Section 3.1 Generating Random Numbers
QA3-1 A simple table construction. If the GiGo Company has the data of TR ranging from 0 to 10, and TC ranging from 0 to 5, and the
year ranging from 1970 to 2010, construct GiGo Company’s financial statement as in Table 3.2a.
(a) Please show the formulas above the row titles, and find the average TR, TC, and profits of the
data.
(b) Calculate the average of TR, TC, and Profits over the years;
(c) Enclose the data part with borders;
(d) Color the average row in blue, and change the font color to white;
(e) Change to two decimals.
(f) Show your cell formulas of TR, TC, and Profits for 1970 above the column titles, and show the
cell formulas of the average TR, TC, and profits of the data a row below the table.
(g) Print out only the data from 1970 to 1975, and 2005 to 2010 (hide the other rows), with the
average and formula rows of the original table.
(Hints: (f) See Table 3.3a. (g) Selecting the rows from 1976 to 2004, use /“Home”/Cells,
Format!/Visibility, Hide & Unhide!/Hide Rows/. Then print out.)
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 16
QA3-2 Generating a large set of monthly data. In Table 3.2a, instead of yearly data, we have monthly data from 2000 to 2006. Supposing that TR
ranges from 0 to 100 and TC ranges from 0 to 50, construct the financial statement of the firm for TR,
TC, and Profit as follows.
(a) The row titles range from Jan, Feb, … up to Dec for each year.
(b) Change the data to two decimal places (after the decimal point).
(c) Find the monthly average of TR, TC, and Profit of each year
(d) Enclose the data part with a box.
(e) Find the grand average for seven years
(Hints: Since the entries are random, we use the following trick to enter the data. (a) Enter the format
of the table as Table QA3.2a below.
2-1 A simple table construction
Formulas =RAND()*10 =RAND()*5 =+B5-C5 (e)
(0, 10) (0, 5)
TR TC Profits
1970 6.88 3.37 3.51
1971 6.28 4.98 1.30 (b) (d)
1972 9.25 0.16 9.08
1973 8.56 1.51 7.04
1974 8.25 0.43 7.82
1975 6.12 0.16 5.95
2005 4.98 0.72 4.26 (f)
2006 8.96 2.44 6.51
2007 6.21 3.03 3.18
2008 1.75 0.70 1.05
2009 6.23 3.80 2.43
2010 5.19 2.46 2.73
average 5.89 2.46 3.43 (a) (c)
Formulas =AVERAGE(B5:B45) =AVERAGE(C5:C45) =AVERAGE(D5:D45) (e)
Notes: To hide rows, select rows 10 and 40 above, then
use <“Home”><Cells, Format!><Visibility, Hide & Unhide!><Unhide, Rows>.
to unhide the rows.
Note: To show the cell fomulas, at present, you may use the method in Section 2.2.2, p. 40.
Later, you may also use the method in Section 6.5.5, p. 204, or the Find and Replace method in
Fig. 14.10, p. 546.
For the Find and Replace, select the row, <^F>. In Fig 14.10, <Find what:,=> (enter =) and in
<Replace with:, => (enter space and =) <Replace All>. The row will show the formulas.
To go back to the numerical values in the row, reverse the above procedure, namely,
select the row, <^F>. Fig. 14.10 appears. In Fig 14.10, <Find what:, => (enter a space and =) and in
<Replace with:,=> (enter = without a space) <Replace>. The row will show the values.
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 17
Sometimes, depending on the setting of the Excel program, when Jan is entered in A13, you may use
the fill-handle button to drag Jan down to Dec. Otherwise, You may use the custom Autofill method
in Excel to enter months. See Appendix B. (b) Enter the first row of Jan 2000 for TR, TC, and
Profit, and then copy the first row up to Dec 2000. Find the average below the Dec row. (c) Copy
A12:D25 down to A26, and change 2000 to 2001. (d) Repeat the copy process up to 2006. (e) To
find the seven-year average of TR, in the last row of the whole table, enter the average formula and
select the seven averages one by one, separated by a comma.
Copy the Grand Average of TR to that of TC and Profit).
6.
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 18
QA3-3 Constructing a table
The table of TR, TC, and profit of the GiGo Company from 1990 to 2005 is given as Table 3.2a in
the text: The TR and VC are random numbers. TR ranges from 0 to 50 and VC ranges from 0 to 25.
FC is 10 and TC = VC+FC.
`
(a) Find the total revenue, variable cost, fixed cost, total cost, and profit of the firm from 1990 to
2005. All entries should have two decimal places.
(b) Copy the data to sheet2. Name Sheet2 as Q1. Change the data to values so
that the data will not change when the "return" key is pressed. Optimize the columns.
(c) Enclose the data part of the table with a heavy box AFTER you have completed the table.
The row and column titles should be in bold face. The column title should be centered.
(d) Use light yellow paint to highlight profits, and light blue to highlight TR.
(e) Find the sum (=sum()), average (=average()), max (=max()), min(=min()) of each column, and
list them at the bottom of the table.
QA3-4 Entering Formulas In Table QA3-4a below we enter the sales information of 60 regions. In addition to the average
function, other formulas of some basic descriptive statistics are listed and defined below. In each
HW2-3 Constructing a table
=rand()*50 =RAND()*25
TR VC FC TC Profit
1990 30.55 2.97 10.00 12.97 17.58
1991 4.57 23.28 10.00 33.28 -28.72
2004 16.70 4.45 10.00 14.45 2.26
2005 23.02 23.03 10.00 33.03 -10.01
sum 353.01 192.93 160.00 352.93 0.08 =SUM(F4:F19)
average 22.06 12.06 10.00 22.06 0.00 =AVERAGE(F4:F19)
max 48.44 23.63 10.00 33.63 30.91 =MAX(F4:F19)
min 3.67 0.23 10.00 10.23 -28.72 =MIN(F4:F19)
Notes : Enter the column and row labels fi rs t, and then enter the formulas
in row 4. Copy row 4 down to the whole table. Do not copy column by
column. #
TR VC FC TC Profit
1990
1991
1992
…
2005
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 19
formula, the range must be specified. Do not reproduce the colored borders or the hints. In these
lecture notes, colored borders are for your reference only.
Explanation of the formulas (see Chapter 5 for details) =max(range) the maximum number of the specified range.
=min(range) the minimum number of the specified range.
=sum(range) the sum of the specified range.
=average(range) the average value of the specified range.
=var(range) sample variance (the sum of squared deviation (SSD) from the mean
divided by n-1).
=varp(range) population variance (the SSD from the mean divided by n)
=stdev(range) sample standard deviation (the positive square root of var)
=stdevp(range) population standard deviation (the positive square root of varp)
=CV sample coefficient of variation =stdev*100/average, in %.
=CVp population coefficient of variation =stdevp*100/average, in %.
Questions:
(a) Enter the formulas in the shaded part of the TR column (B64:B73), and then copy to the TC
column.
(b) Enter the first row, B4:G4, and then copy the first row down. Do not copy column by column.
(c) Formulas can be entered by first entering =max(B$4:B$63) in cell B64, and copying B64 down
to B73. Change the formula name. Enter CV and CVp using the formula given. Then copy B64:B73
to G64:G73.
(d) Write the cell formulas in B66:B75 on the right-hand side of the table, H66:H75.
(e) Enclose the table with boxes as shown in Table QA3-4a.
(Hints: (a) Use the fill-handle to fill in the “Region”. (d) Copy B66:B75 to H64:H73, and edit the
formulas).
A B C D E F G
1 Table HW2-4 Sales of GiGo Company
2 rand()*100 rand()*30 Earning Rate Profit ratio
3 Region TR TC Profits TR/TC Profits/TR Profits/TC
4 1
1
5 2
..
63 60
64 max
65 min
66 sum
67 average
68 var
69 varp
70 stdev
71 stdevp
72 CV (%)
73 CVp (%)
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 20
QA3-5 Use of the Help button The help button of Excel 2007 is at the upper right corner “?” in the menu bar. You may also enter
/F1/ to invoke the help menu. Using the help button /?/ or /F1/, find the definition of var, varp, stdev,
and stdevp. Write the formula for each. You may simply copy the formula from the Help, or print
out the explanation from the help section.
HW2-4 Entering formulas
=B5/C5 =D5/B5 =D5/C5
rand()*100 rand()*30
Earning
Rate
Region TR TC Profits TR/TC Profits/TR Profits/TC
1 36.49 24.02 12.47 1.52 0.34 0.52 Enter the formulas in row 5
2 48.76 20.81 27.95 2.34 0.57 1.34 fi rs t, and then copy down to
3 37.09 14.05 23.04 2.64 0.62 1.64 row 64. Use the horizontal
4 6.23 13.51 -7.28 0.46 -1.17 -0.54 split line.
57 62.63 10.22 52.41 6.13 0.84 5.13
58 47.65 15.12 32.54 3.15 0.68 2.15
59 54.89 13.27 41.62 4.14 0.76 3.14
60 87.08 10.70 76.39 8.14 0.88 7.14 Formula for the TR column
max 98.61 27.84 92.59 112.85 0.99 111.85 =MAX(B5:B64)
min 0.16 0.18 -16.33 0.01 -72.31 -0.99 =MIN(B5:B64)
sum 2965.30 816.61 2148.69 541.93 -49.75 481.93 =SUM(B5:B64)
average 49.42 13.61 35.81 9.03 -0.83 8.03 =AVERAGE(B5:B64)
var 920.84 60.12 945.99 357.64 89.35 357.64 =VAR(B5:B64)
varp 905.49 59.12 930.22 351.68 87.86 351.68 =VARP(B5:B64)
stdev 30.35 7.75 30.76 18.91 9.45 18.91 =STDEV(B5:B64)
stdevp 30.09 7.69 30.50 18.75 9.37 18.75 =STDEVP(B5:B64)
CV(%) 61.40 56.97 85.89 209.38 -1139.97 235.45 =B71*100/B68
CVp (%) 60.89 56.50 85.17 207.63 -1130.43 233.47 =B72*100/B68
Note: Enter the column B65:B74 fi rs t, and copy to B65:G74.
Note: To show the cell fomulas, at present, you may use the method in Section 2.2.2, p. 40.
Later, you may also use the method in Section 6.5.5, p. 204, or the Find and Replace method in
Fig. 14.10, p. 546.
For the Find and Replace, select the row, <^F>. In Fig 14.10, <Find what:,=> (enter =) and in
<Replace with:, => (enter space and =) <Replace All>. The row will show the formulas.
To go back to the numerical values in the row, reverse the above procedure, namely,
select the row, <^F>. Fig. 14.10 appears. In Fig 14.10, <Find what:, => (enter a space and =) and in
<Replace with:,=> (enter = without a space) <Replace>. The row will show the values.
Table HW2-4 Sales of GiGo Company
Profit ratio
Box 3-5 To find the definition of, say, VAR, press /F1>, the Excel Help drop-down window appears.
Enter "VAR" or "VAR worksheet function" and click /Search>.
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 21
QA3-6 Formulas in the rows and columns Table QA3-6a shows the 2009 sales by 50
regions. Fill in the table and do your best to present your table in color.
(Hints: (a) You may enter =rand()*40 in Q1, select Q1 cell and copy them to the right up to Q4.
Then enter each cell to make an appropriate correction. (b) Enter all the formulas in the first row
(Region 1), and copy them down to Region 50).
Table QA3-6a 2009 Sales by 50 Regions
rand*40 rand*60 rand*80 rand*100
Region Q1 Q2 Q3 Q4 sum average varp stdev stdevp CV CVp
1
2
….
50
sum
average
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 22
QA3-7 TR and TC TR and TC are random numbers ranging from 0 to 100 for TR and 0 to 50 for TC, respectively.
Profits = TR-TC. The year ranges from 1970 to 2000.
Table HW2-8a. Sales of the GiGo Company
Year rand*100 rand*50 Profit ratio
TR TC Profits Profits/TR Profits/TC
1970
1971
…
…
1999
2000
average
stdev
CV (%)
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 23
(a) Construct the table exactly as shown, and fill in the table. All entries should have two digits after
the decimal point. Center all the entries of the columns. Optimize the olumn.
(b) Enclose the data part of the table with a heavy box AFTER you have completed the table. The
row and column titles should be in bold face. Both column and row titles should be centered.
(c) Use light yellow paint to highlight profits column, and light blue to highlight the TR column.
Add a $ sign to the value of the profits column.
(d) Find the average (=average()), the standard deviation (=stdev()), and the coefficient of variation
(=stdev*100/average) for all five columns. Place them below the table as shown in the table.
(e) Show the Excel cell formula you entered in the 1970 row below the table.
(f) Draw the chart.
For Section 3.2 Entering Equations in a Table
QA3-8 The total revenue (TR) function.
The demand function of firm ABC is given as p = 30 – Q. Find the firm’s total revenue (TR) and the
marginal revenue (MR), which is defined below. Draw the demand schedule and TR and MR for Q =
0, 0.5…10.
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 24
MR =
1
1
ii
ii
TRTR
where, as in (3.5), Qi is the ith output level. Show the cell formulas of the last row of the table.
Answer:
QA3-9 The total cost (TC) function The total cost (TC) function of firm ABC is given as
TC = Q
3 – 12Q
2 + 60Q +20
The variable cost (VC), fixed cost (FC), average total cost (ATC), average variable cost (AVC),
average fixed cost (AFC), and marginal cost (MC) are defined as follows:
VC = Q
3 – 12Q
2 + 60Q FC=20,
ATC = TC/Q, AVC = VC/Q, AFC = FC/Q,
MC = 1
1
ii
ii
TCTC,
Construct the table for TC, VC, FC, ATC, AVC, AFC, and MC for Q = 0, 0.5,…10. Draw the chart
as Fig. 3.4a. Show the cell formulas of the last row of the table.
HW2-9 The total revenue (TR) function Table HW2-9
Q p=30-Q TR = (30-Q)Q
p=30-Q TR MR
0 0 30 0 Enter the cell formulas in row 4 first.
1 0.5 29.5 14.75 29.5 Formulas are listed at the end of the table.
2 1 29 29 28.5
19 9.5 20.5 194.75 11.5
20 10 20 200 10.5
Cell formula for row 24
row 20 10 =30-B24 =(30-B24)*B24 =(D24-D23)/(B24-B23)
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 25
QA3-10 The profit function Construct the profit function as ∏ = TR – TC, where TR is given in QA3-9 and TC is given in QA3-
10 above, for Q = 0, 0.5, …, 10. Thus, you have four columns: Q, TR, TC, and ∏ on the table.
(a) Find the marginal profit as defined in the text (equation (3.5)), and enter it as the fifth column.
(b) Enter MR, MC, and the difference MR-MC next to the marginal profit column (thus, you have a
total of eight columns including the column for the independent variable Q).
(c) Draw the chart of mProfit, MR, and MC like Fig. 3.4a.
HW2-10 The total cost (TC) function
Table HW2-10 VC = Q
3 – 12Q + 60Q FC=20, MC=(TCi - TCi-1)/(Qi-Qi-1)
TC = Q
3 – 12Q
2 + 60Q +20 ATC = TC/Q AFC = FC/Q
FC=20 AVC = VC/Q
Q Equations are listed above
TC VC FC ATC AVC AFC MC the table, the Excel cell
0 20.00 0.00 20.00 formulas are listed below
0.5 47.13 27.13 20.00 94.25 54.25 40.00 54.25 the table.
1 69.00 49.00 20.00 69.00 49.00 20.00 43.75
9.5 364.38 344.38 20.00 38.36 36.25 2.11 94.75
10 420.00 400.00 20.00 42.00 40.00 2.00 111.25
20.00
row 10 =A27^3-12*A27^2+60*A27+20 =C27/A27 =D27/A27
=A27^3-12*A27^2+60*A27 =(B27-B26)/(A27-A26)
=B27/A27
Notes: A6 must be blank to draw the chart correctly.
It is always a good practice to show the formula above the table and the cell formula
below the table.
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 26
(d) Do you find any relationship between the marginal profits and the difference MR-MC? Give an
economic interpretation.
(e) Are the profit level in this example reasonable? What is the economic interpretation?
(Hints: (a), Q# is between Q = 5.5 and 6.5, or Q
# = 5.75 π
# is between -18.63 and -20.00)
QA3-11 Profit maximization
The total cost, total revenue, and the profit of a firm is given as follows:
HW2-11 The profit function
(a) TR =Q(30-Q) TC =Q^3-12Q^2+60Q+20
Table HW2-11 Profit of the GiGo Company (b)
TR TC Profit mProfit MR MC MR-MC
0 0.0 0.00 20.00 -20.00
1 0.5 14.75 47.13 -32.38 -24.75 29.5 54.25 -24.75
2 1.0 29.00 69.00 -40.00 -15.25 28.5 43.75 -15.25
3 1.5 42.75 86.38 -43.63 -7.25 27.5 34.75 -7.25
4 2.0 56.00 100.00 -44.00 -0.75 26.5 27.25 -0.75
5 2.5 68.75 110.63 -41.88 4.25 25.5 21.25 4.25
6 3.0 81.00 119.00 -38.00 7.75 24.5 16.75 7.75
7 3.5 92.75 125.88 -33.13 9.75 23.5 13.75 9.75
8 4.0 104.00 132.00 -28.00 10.25 22.5 12.25 10.25
9 4.5 114.75 138.13 -23.38 9.25 21.5 12.25 9.25
10 5.0 125.00 145.00 -20.00 6.75 20.5 13.75 6.75
11 5.5 134.75 153.38 -18.63 2.75 19.5 16.75 2.75
12 6.0 144.00 164.00 -20.00 -2.75 18.5 21.25 -2.75
19 9.5 194.75 364.38 -169.63 -83.25 11.5 94.75 -83.25
20 10.0 200.00 420.00 -220.00 -100.75 10.5 111.25 -100.75
avg 115.83 172.50 -56.67
row 20 =B25*(30-B25) =+C25-D25 =(C25-C24)/(B25-B24)
=B25^3-12*B25^2+60*B25+20 =G25-H25
=+(E25-E24)/(B25-B24)
=(D25-D24)/(B25-B24)
(d) There are two points at which mProfit = 0, that is, at which MR = MC. The first point is at
an output between 2.0 and 2.5, closer to 2.0. The second point is at an output between
5.5 and 6.0, or at output = 5.75.
From the shape of the marginal profit curve, at the first point, profit increases as output
increases. Hence, the first point cannot be the optimal point.
At the second point, profit decreases as output increases. At Q = 5.75, profit = 0, and a
further increase in output will make profit negative. Thus, Q = 5.75 gives the
maximum profit.
In mathematics, the condition that mProfit = 0, or, equivalently, MR = MC, is called the
necessary condition of profit maximization.
The sufficient condition of profit maximization is that MR = MC and the marginal
profit function is negatively sloped. The second point clearly satisfies this
condition.
(e) The profit level is consistently negative for all the output level. The firm is losing money.
It may be the case for a short run period, but it is not sustainable for the firm in a
long run period.
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 27
TR =Q(500-5Q)
TC = Q3 – 10Q
2 + 100Q + 50
where Q = 1, 2, …, 20. As usual, Profit = TR – TC, and marginal profit is
mprofit =1
1
ii
ii
profitprofit
(a) Construct the table of output, TC, TR, profit, and marginal profits. All data and formula entries
should have two digits after the decimal point.
(b) What is the average (=average()) of TC, TR, and profits? Place the averages below the table.
(c) Enclose the Profit column of the table with a heavy box AFTER you have completed the table.
The row and column titles should be in bold face. The column headings should be centered, and in
bold face.
(d) Use light yellow paint to highlight the maximum profit row(s).
(e) Draw a chart of TC, TR, Profits, and marginal profits without markers. Enter the chart title, and
horizontal and vertical axis titles.
(f) Using a text box to denote the name of each of the four curves. Make sure the text boxes are
embedded in the chart.
(g) Denote the point of maximum profit with an empty circle. Draw a vertical dotted line through the
point of maximum profit.
(h) Using right or left braces, show that, at the maximum point of the profit curve, the height of the
maximum profit must be the same as the difference between the TR and TC curves at that point.
(i) In the chart, how is the marginal profit curve related to the profit curve at the point of the
maximum profit?
(j) Show the cell formula for Q = 20 below the table.
Total Revenue, Total Cost, and Profits-Excel Tables 3 - 28
(e) (f) (g) (h)
-1000
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
TR
, TC
, P
rofi
t, M
pro
fit
Output
TR, TC, Profit and mProfit of a Firm
TR
TC
Profit
mProfit
TR
TC
Profit
mProfit