Color Coding for Private Equity

How to Make Your Sheets Look Professional: Color Coding for Private Equity

Color coding within excel is vital to maintain proper organization and operate more efficiently. It is imperative that each color has a distinct meaning, and to stay consistent to avoid any misinterpretations. Having various font colors allows the reader to quickly transition their eyes from one area to another all while understanding the various content displayed.

Input Cell

The industry standard for blue text within a spreadsheet is the required input. This is data that must be manually inputted within the sheet to manipulate the results. The modeler of the template will insert hypothetical inputs into the cell as a placeholder for unique data that will vary from deal to deal. 

Calculation Cell

Next, the black font cells are labels, calculations, or outputs themselves. These are generally manipulated by the blue text and will change based on the data being inputted. All the black font cells will vary according to the assumptions being inserted.

Error Cells

It is important to incorporate error cells into the financial spreadsheet to signal any cells that need to be changed. Utilizing the color red draws the attention of the model user and indicates that something must be changed in order for the model to properly work.  

Shading

Utilizing shading within your financial model is beneficial to distinguish between various aspects of the excel spreadsheet. To start the heading of the sheet should be a dark blue color with white font to display the title and category of the following data. Next, subheadings are usually found to be a light gray with black font to portray the transition into the data. Lastly, the key data point throughout the model should be shaded a color to make it easy to spot out amidst various data outputs. 

Conditional Color Formatting

Within excel, utilizing conditional formatting allows for the user to develop certain guidelines for how a set of cells should be colored. This allows the user to more efficiently format their spreadsheet and implements a sense of creativity within the model.

Conclusion

Utilizing color coded formatting within excel is a great way to further enhance your financial model. Having various colors of text and shading allows for a more efficient navigation throughout your spreadsheet as it creates a more user-friendly experience. 

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About the Author

Eric Bergin is the founder of TSM. He realized that there was a need for real estate financial models that were more than just generic templates. He wanted to create a personalized product for his customers that would ensure success for them and their company. Please reach out to him if you have any questions regarding discounted cashflows or if he can help you with your modeling needs.