# iCheck™ Series Microsoft® Office 2007 Real World Applications

## Unit 2: Excel 2007: Business and Personal Finances

### Real World Connection Activities

These articles allow you to further explore various computing topics and include a quiz for review.

Introduction Learn about how businesses use spreadsheet applications in the real world.

Directions Read the information below and apply what you learn to answer the questions. Check your work carefully, and click Submit.

The term spreadsheet comes from the field of accounting, in which business transactions were tracked on large sheets of paper that, when spread out, formed a “spreadsheet.” The spreadsheet application Microsoft Excel borrows its name from accounting because it creates computerized spreadsheets with built-in features such as formulas that make accounting or other types of calculations more efficient.

Many of Excel’s features are designed to help the user analyze data quickly and accurately. For example, Excel includes several built-in formulas that are used to perform automatic calculations. Some of the more common formulas are as follows:

• SUM, to add selected values
• COUNT, to count the number of entries in a selected range
• AVERAGE, to calculate the average of a selected range
• MAX, to find the maximum value in a selected range
• MIN, to find the minimum value in a selected range

Excel also includes several financial formulas, such as PMT, which calculates the payment of a loan based on a fixed payment and interest rate. In addition to built-in formulas, Excel offers features to expedite changes to data, such as the Find and Replace command, which is used to locate and replace a specific data entry throughout a spreadsheet. In a spreadsheet with thousands of data entries, this feature saves the user a substantial amount of time. In order to organize data visually, Excel contains features that make it easy for the user to organize selected data as a pie chart, bar chart, or other graphic. These graphics help businesses make important decisions, as they can see at a glance their inventory, sales, or other important data.

Businesses use Excel to analyze data in a way that helps them make important decisions, as in the following:

• Financial plans, which include data regarding projected sales and expenses, as well as future product and customer growth. Financial plans help businesses structure themselves to remain competitive in the future.
• Budgets, which calculate expected expenses for a certain period of time. Businesses use budgets to determine how they can decrease expenses in order to increase profit.
• Investment portfolios, which include figures such as the total return, or how much a company earned from a particular investment. Businesses need this information to evaluate whether they should continue to make an investment or not.
• Financing services, which involve loans to consumers for homes, cars, or other large expenses. Businesses use loan payments and interest rates to calculate how much they earn from a loan.

Assessment Questions

 1 What is a spreadsheet? 2 Which Excel function would you use to determine how many entries are in a particular column? 3 Why are charts useful to businesses? 4 How do companies use budgets?