A spreadsheet, at its most basic level, is essentially a matrix of rows and columns, used to record amounts and perform calculations. Spreadsheet rows and columns are composed of individual cells where users enter data. In most electronic spreadsheets, letters (A, B, C, etc.) identify columns, while numbers identify rows (1, 2, 3, etc.). Therefore, combinations of letters and numbers such as Al or B2 identify individual cells. Usually the entries across a given row will have something in common (e.g., sales dollars), while the entries filling a given column will have another dimension of common element (e.g., the year 1999). Electronic spreadsheets—such as Excel, Quattro Pro, and Lotus 1-2-3—combine the capabilities of a calculator with a word processor, enabling users to perform various analyses and calculations and represent numeric information.
The manual form of the spreadsheet has been used in accounting for many years, and involved pencils, erasers, adding machines, tedium, and mistakes. Making a change used to be particularly painful when the item rippled through other sections or other spreadsheets. These factors motivated Dan Bricklin, a Massachusetts Institute of Technology graduate and a student at Harvard Business School at the time, to create the first spreadsheet program in 1978. Although not user friendly, the program facilitated calculations with its matrix of five columns and 20 rows. To improve the program, Bricklin enlisted the help of Bob Frankston and together they developed VisiCalc, short for "visible calculator," which they released in 1979. Because of its success, other companies such as Lotus and Microsoft began producing their own spreadsheet applications.
Contemporary electronic spreadsheets are created by popular, user friendly software that runs on personal computers. Interrelated spreadsheet calculations can be "linked" so that making a change will automatically update other derivative or related calculations. Making editorial changes with electronic spreadsheets is quick and painless in that they allow users to cut, copy, and paste information with simple keystrokes or mouse gestures. In addition, every cell in an electronic spreadsheet can communicate with every other cell through rules defined by the users.
Users can perform basic functions by entering a formula for addition, subtraction, multiplication, division, or exponentiation and then selecting the rows and columns the formula will apply to. For example, a user can enter a formula for adding the contents of the cells Al through Fl. Furthermore, multiyear calculations can quickly be programmed, and recalculated under a variety of different assumptions. Sensitivity or "what-if" analyses have become enormously easier and more ubiquitous due to the advent of the electronic spreadsheet. Such analyses are facilitated by having the spreadsheet be "driven" by a number of input variables located in one section of the matrix. Spreadsheet "what if analysis, for example, allows a user looking for a new house to plug in the prices of different houses and immediately view the effect on other variables, such as tax and mortgage payments.
Business estimates or projections using discounted cash flow analysis is another example of a task facilitated by the electronic spreadsheet. The basic cash flow model can be set up with variables established for revenue growth rate, market share, cost of goods sold, operating expenses, discount rate, the length of time to which to discount, etc. Any of the variables can then be modified, serially or concurrently, to quantify the effect on calculated value.
Electronic spreadsheets are especially useful, as compared to their manual predecessors, when doing complex calculations, such as certain statistical measures variances, regression coefficients of determination, and confidence intervals for sample results. They are also most useful when dealing with large volumes of data. Most electronic spreadsheets provide three main types of functionality:
More recent versions of the electronic spreadsheets have incorporated a print-enhancing capability whereby the user can set different font sizes and styles, boldface or underline selected items, create shaded areas for emphasis, and make other stylistic improvements to the hard copy output. It is now possible to compress large spreadsheets to fit on regular size paper, number sequential pages, add header or footer comments, and generally make the output look neat and professional. Spreadsheet programs are the second-best-selling application behind word-processing programs. Microsoft's Excel is the leading spreadsheet application followed by Corel's Quattro Pro and Lotus 1-2-3. These spreadsheet programs largely have the same features and capabilities, but they differ in style and commands.
SEE ALSO : Software
[ Christopher C. Barry ,
updated by Karl Heil ]