Depreciation updating of values has errors
In many cases it makes sense to choose the scenarios that you will be including in the credit or investment analysis.
In the example below I have illustrated the concept with CFADS (Cashflow Available for Debt Service) but in your specific case it may be more useful with another metric or a combination of several metrics.
To set up the Data Validation, nurse click Data – Data Validation and select Allow: List and set the Source to “SL, RB”.This is a bigger topic that will be covered in a separate article but the screenshot below will give you an indication of the flow of information in the Depreciation calculations worksheet of the model: Both methods (Straight Line AND Reducing Balance) are calculated for all asset categories but only the selected depreciation method flows through to the outputs.In the illustrated case above only the Straight Line values for the Depreciation Charge flows through to the Profit and Loss. The ‘Edit directly in cell’ related to the way Excel shows formulas in the cell and in the toolbar when you are in Edit mode (which is what you get when you click F2).Edit directly in cell –activated When Edit directly in cell is activated the formula in the toolbar does not get colour-coded but the formula in the cell does.
This method can save you hours of work if you are on performing your own credit analysis but are not responsible for the modelling on the transaction.