I have two questions regarding this lesson:
- Is it Ok that I am not fully understanding the P&L calculations and why we put the negative sign on front of the equations of SUMIF and why the values of each column (2016, 2017, 2018) before the filter were not zero then they became zero after the filter of net income?
- Why did we brought the data by SUMIF and not by VLOOKUP as the data in the previous lecture (the previous columns) ?
Thanks for reaching out!
To answer your questions:
- It is ok, of course. But still, it would be better if you have some context regarding these issues.
P&L calculations boil down to assigning P&L categories to smaller groups of items. What we’re doing is subtracting costs from revenues to arrive at net income. We add a minus sign in front of SUMIF to see costs as negative (because we subtract them) and revenue as positive (the accounting software gave us the figures in a reversed way – positive costs and negative revenues, which is confusing). When summed, the values in each column (if we don’t take the net income value in consideration) should give us net income. We also have net income which is already reported by the accounting software. If we add a minus sign in front of it, we would simply have net income (from the some of all other items) – net income = 0.
2. When you sum numbers you should always use SUMIF to protect yourself from mistakes. VLOOKUP might duplicate one of your results (if the code you’re using is found twice in the lookup column). With SUMIF, you’ll be able to avoid this issue.
Hope this helps!
I understand why we added a minus sign in front of the ‘net income’ (to check the numbers), but why did we leave the minus there? Weren’t we supposed to reverse the changes (after checking)? Also, wouldn’t it be better to just delete the ‘net income’ rows? We can get those numbers anytime we want by summing up the columns and it wouldn’t confuse us.