Q:

How do you use Excel to calculate financial statements?

A:

Quick Answer

Excel can be used to calculate financial statements, such as a liquidity ratio, by automatically computing the metric based on the input data and given formula. Quick ratio is a type of liquidity ratio that measures a firm's financial health based on its most liquid assets.

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Full Answer

The steps below demonstrate how to calculate the quick ratio using Microsoft Excel 2010.

  1. Launch Excel
  2. Open Microsoft Excel by clicking "Start," followed by "All Programs," then "Microsoft Office" and finally "Microsoft Excel 2010."

  3. Input the necessary values into the spreadsheet
  4. Choose three cells within the same column, such as A1, A2 and A3. Label the cells as "Assets," "Liabilities" and "Inventories." Take the corresponding values from the company's balance sheet and enter them into the cells B1, B2 and B3.

  5. Use the formula (B1 - B3) / B2
  6. Input the formula into a separate cell for Excel to automatically display the quick ratio.

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