Question

In financial modeling, what is the difference between a multi-spreadsheet approach and a single-spreadsheet approach?

A) There is no difference; the terms are used interchangeably
B) Multi-spreadsheet uses multiple software applications, while single-spreadsheet uses one
C) Multi-spreadsheet involves using multiple Excel files, while single-spreadsheet uses one Excel file
D) Multi-spreadsheet is only used in large corporations, while single-spreadsheet is for small businesses

Answer 1

The multi-spreadsheet approach in financial modeling uses multiple Excel files, while the single-spreadsheet approach uses one Excel file. The choice between them depends on the model's complexity, ease of use, and preference.

Step-by-step explanation:

The difference between a multi-spreadsheet and a single-spreadsheet approach in financial modeling is mainly about the organization and structure of data and financial information. A multi-spreadsheet approach (C) involves using multiple Excel files, which may each contain related sets of data, assumptions, and calculations that are part of a larger model. For example, one spreadsheet might handle the revenue calculations, another might deal with expenses, and others might be for cash flow and balance sheet forecasts. In contrast, a single-spreadsheet approach utilizes one Excel file to store all the related data, assumptions, calculations, and outputs. Each section would typically be organized in different worksheets within the same file. This approach keeps all information in one place but can lead to a very large and potentially unwieldy spreadsheet. The choice between these approaches depends on the complexity of the model, ease of use, and user preference. It does not necessarily relate to the size of the corporation or businesses as stated in option D.