Using User-Defined Accounts

Using Memo Accounts

Memo Accounts calculate and store data for formulas other accounts. There are 20,000 possible memo accounts in Strategic Modeling—(300.00.000, 305.00.000... 395.00.000). You assign relationships between Memo Accounts and other accounts as needed—they initially have no account relationships.

For example, you could use two Memo Accounts to model annual sales based on a price vs. quantity relationship. You enter the price of the item in one Memo Account, and the quantity sold in the second. To see the result of this relationship, you create a Freeform Formula in the Sales Account (v1000) multiplying the two Memo Accounts.

Each of the 20 Memo Accounts can be subaccounted 999 times, for a total of 19,980 possible Memo Accounts containing additional account details necessary to complete your analysis.

Memo Accounts and their subaccounts both enable:

Changing account descriptions
Entering data
Changing forecast methods
Attaching account notes

You can turn the display of Memo Accounts on and off from Account Input Status. Memo accounts are not used in calculations on financial statements unless you reference them in a forecast method or historical formula.

To use Memo Accounts:

Select Accounts, and then select User Defined Accounts.
In Select Account, select Memo.
From the drop-down, select an account.

To add Memo Accounts or change their names, do so from the Subaccounts dialog box.
Select the Output Type:
- Currency
- Items
- Percent
- Ratio
  
  Note:
  
  When you select Calculated in formula in all periods, all Output Types are available. If you select Input in history, the Output Types are limited to Currency and Items.
Optional: If the Output Type is Currency or Items, the account output values can be shown in a denomination other than the Default Currency Units.

Override the default setting by selecting an Output Units option:
- Ones
- Tens
- Thousands
- Millions
- Billions
- Trillions
In Value, specify how to enter data values. For example, select Calculated in formula in all periods to input formulas.
Specify the Aggregate Period Value option:
- Last interim period value (such as Balance Sheet)
- Sum of interim periods (such as Income Statement)
- Weighted average based on the financial account that you select from the account drop-down list. (such as Discount Rate)
- None applies the formula in aggregate periods. (such as Ratios)
  
  Note:
  
  These rules also apply to the calculation of dimensional parents.
Select the Output Type:
- Currency
- Items
- Percent
- Ratio
  
  Note:
  
  When you select Calculated in formula in all periods, all Output Types are available. If you select Input in history, the Output Types are limited to Currency and Items.
Optional: If the Output Type is Currency or Items, the account output values can be shown in a denomination other than the Default Currency Units.

Override the default setting by selecting an Output Units option:
- Ones
- Tens
- Thousands
- Millions
- Billions
- Trillions
Click OK.

Using Custom Ratio Accounts

Strategic Modeling automatically calculates 34 ratios. You can also use 10 Custom Ratio accounts (6400.00.000 through 6445.00.000) for customized calculations. Use Custom Ratio accounts to enter formulas that are used to calculate your own ratios. Custom Ratio accounts can be subaccounted 999 times to create additional Custom Ratios.

The Financial Ratios report displays all ratios calculated in an analysis. Custom Ratio accounts are displayed at the bottom, enabling you to distinguish between ratios defined by Strategic Modeling and your individual ratios.

Formulas that you can use to create Custom Ratios are similar to the Freeform Formula forecast method. You can use constant numbers or values from other accounts in Custom Ratio formulas. You can also use different functions in the formula.

To use Custom Ratio accounts:

From the Account grouping label, select User Defined Account.
In User Defined Account, select Ratio.
From the drop-down list, select a ratio account.

To add ratio accounts or change descriptions, access the Accounts view spreadsheet or Subaccount Options dialog box.
Select the Output Type:
- Currency
- Items
- Percent
- Ratio
  
  Note:
  
  When you select Calculated in formula in all periods, all Output Types are available. When you select Input in history, Output Types are limited to Currency and Items.
Optional: If the Output Type is Currency or Items, the output value of the account can be shown in a denomination other than the Default Currency Units.

Override the default setting by selecting an Output Units option.
In Value, select Calculated in formula in all periods to input formulas, using Accounts and Functions tabs.
Specify the Aggregate Period Value as an option:
- Last interim period value (such as Balance Sheet)
- Sum of interim periods (such as Income Statement)
- Weighted average based on the financial account you select from the account drop-down list. (such as Discount Rate)
- None applies the formula in aggregate periods.
Click OK.

Using Debt Covenant Accounts

In Strategic Modeling, you can establish measures testing a model's ability to meet performance standards. Use user-defined Debt Covenant accounts to enter your debt covenant requirements for testing models.

Each of the five Debt Covenant accounts (v6500, v6505, v6510, v6515 and v6520) can have up to 999 subaccounts to accommodate all the covenants in your analysis.

To accommodate the required inputs and outputs for covenant tests, each Debt Covenant account has two related accounts, for a total of three related accounts:

Test (.00): Accommodates the covenant test parameter.
Actual (.01): Accommodates the actual performance equation.
Result (.02): Accommodates the difference between the test parameter and the actual performance equation.

When you subaccount Debt Covenant accounts, all related accounts also receive subaccounts, enabling you to automatically create additional Debt Covenant Test Parameter accounts, actual performance equation accounts, and result accounts.

Debt Covenant accounts are accessible from the User Defined Accounts dialog box, so that the output type and units can be selected (for example, currency in millions). Debt Covenant accounts are displayed on the bottom of the Funding Analysis Report. You can insert the Debt Covenant accounts on reports by using the Edit, Insert command.

Covenant Test Parameter Account

This input account is accessible from the Accounts Spreadsheet view or the Account Input dialog box. Enter a test parameter amount for each period in the file (such as Working Capital of $200 million in 1995, $250 million in 1996, and so on). You can enter different test parameters from period to period. In the User Defined Account dialog box, you can select the output type and units.

Actual Performance Equation

This account is accessible from the User Defined Accounts dialog box. Enter formulas measuring the actual performance of the analysis. (For example, Working Capital = Current Assets - Current Liabilities, using the formula v2100 - v2600). Select the output type and units.

Covenant Result Account

This account, accessible from the User Defined Accounts dialog box, calculates the difference between the test parameter and actual performance results. It measures the result of how the model performs relative to the covenant test. To model a minimum test (for example, Minimum Working Capital), enter a formula that requests the Actual-Test accounts:

(v65xx.01 - v65xx.00).

Results are displayed as a negative numbers if covenants are not met (the actual is less than the test parameter).

To model maximum tests (for example, Minimum Debt/Equity), enter formulas representing, the Test-Actual accounts:

(v65xx.00 - v65xx.01).

Results are displayed as negative numbers if covenants are not met, (the and actual is greater than the test parameter).

Entering Covenant Test Parameters

To enter covenant test parameters:

On Accounts, select the Covenant Test accounts (v6500.00 - v6520.00).
Change the account name to match your analysis.

In this example, change the name to Working Capital Test and change the two related account names to Working Capital Actual and Working Capital Result.
Using Account Forecast, change the forecast method to reflect the test parameter data format.

In the example, enter or forecast working capital in Specified Currency.
Enter the test parameter data in all periods.

In the example with four years, enter 100, 150, 200, and 250, respectively.
Select Accounts, and then User Defined Accounts.
In User Defined Accounts, select Covenant, and then select Working Capital Test.
Select the Output Type (currency), and then select Output Units.

Entering Covenant Actual Performance Equations or Result Formulas

To enter covenant actual performance equations or result formulas:

Select Accounts, and then select User Defined Accounts.
In User Defined Accounts, select Covenant, and then select Working Capital Actual.
In Value is, leave the setting at Calculated by formula in all periods.
Enter a formula for the covenant under Formula tab, using the same formula format as in Custom Ratios.

You can also enter ratio accounts in formulas. For this example, enter this formula: v2100 - v2600.
Select Output Type (currency) and Output Units.