Here are some simple formatting rules to follow:
Format input cells differently from calculation cells.
- Use the correct symbols for currency. If the currency is dollars, format 5000 as $5,000 for example, or if it’s in euros, format it as € 5,000.
- Use commas for thousands. This makes your model easier to read and prevents mistakes and misinterpretations.
- Include a dedicated units column. Make sure the units denoted by the amounts in that column are entered into that column’s heading (for example, “MWh,” “Liters,” or “Headcount”).
- Label your data clearly. It sounds simple, but mixing units (for example, mixing apples and oranges, or miles and kilometers) is a common source of error in financial modeling, and good formatting and labeling will avoid this.
- If you round figures into thousands, show this clearly at the top of the row with a descriptive heading. For example, make the column heading “Revenue $’000” to avoid confusion and misinterpretation.
- Include units or currencies in column and row headings. Where possible, each column or row should contain only one type of unit or currency.
- Reserve a column for constants that apply to all years, months, or days. For example, if growth rate is 5 percent, have that in column D, and then link all calculations to column D.