When many people start learning about financial modeling and planning, they do so with a traditional spreadsheet solution. Students and even business professionals are taught that formulas are meant to remain in cells and that formulas can be copied and pasted to expand a model. In other words, the structure and logic behind a model are interconnected. This view of financial modeling and planning would be considered cell-dependent.
Even though this is a popular methodology to learn, it is not the most effective. There is another solution that offers greater benefits: cell-independent logic. When users create models with formulas separated from cells, they are able to reduce errors and increase scalability.
What is Cell-dependent Logic?
As the name suggests, with cell-dependent logic, the formulas are directly linked to cell coordinates. Cell-dependent logic within a business model would look like the following:
These types of formulas can become complex and difficult to audit. When users review a formula for accuracy, they can struggle to sort out what each cell coordinate represents.
What is Cell-independent Logic?
In contrast to cell-dependent logic, cell-independent logic allows for formulas to be constructed without cell references and remain separated from the model’s structure. Without the need for obscure cell coordinates, formulas can be written in natural language and can calculate entire rows or columns. As a result, this type of logic can provide improved transparency, a reduction in errors and an increase in model scalability.
The Quantrix Method
Quantrix implements cell-independent logic. With Quantrix, users can write natural language, range-based formulas. Instead of relying on cell references, Quantrix formulas include item and category names. For example, “Revenue” instead of D4.
It’s much easier to understand Gross Profit = Revenue – COGS when compared to the cell-dependent alternative. Further, when a new time period is added to the structure, that formula is still able to calculate. No copying and pasting needed. This can lead to easier auditing and a dramatic reduction in errors.
Additional Benefits
Not all the benefits of cell-independent logic are strictly tied to formulas. Separated structure also allows for additional features, such as always-on pivoting and filtering. Users can gain insights into their data by moving category tiles from one axis to another – and can narrow their view to display only the data they need.
Next Steps
Want to see how Quantrix can work for your business? Book a personalized demo or check out our free 30-day trial.
