FIX EVERYTHING BUTTON - PART ONE
Transcript
Welcome to this video. In this video, I will cover the Fix Everything button in the ARGUS Excel Model. The Fix Everything button is one of the most powerful features in the ARGUS excel model. I highly recommend clicking on this button before checking out the final underwriting results.
Pop Up Wndow
I click on the FIX EVERYTHING button and it takes some time for the window to pop up. This button does 3 things. First, fully recalculate the Argus Excel Model. Second, fix all circular references in the model. Third, check on the 6 critical errors in the model.
Circular Calculation
I can see the mouse turns into a circle, which is a waiting mode. This tells me there is a massive amount of calculation being done right now. In the meantime, I wouldn’t click elsewhere or touch the keyboard to interrupt the calculation. Every time the FIX EVERYTHING button is clicked, a full calculation is triggered automatically. This calculation is different than a regular calculation by hitting F9 in Excel. A full calculation checks every link and formula in the Excel and redo the calculation in them. This is particularly important because there are thousands of rows in the ARGUS excel model and a regular excel calculation will not do the trick. The circular references are also fixed automatically when the FIX EVERYTHING button is clicked. A circular reference is fixed by turning on and off a circular break. There are plenty of materials online covering this topic. I will leave a link for one of the resources below (https://www.ablebits.com/office-addins-blog/2015/12/15/circular-reference-excel/) It is saying everything looks good as I have input the assumptions correctly. Click Okay.
All Functions of the Button
Now I am going to show you all the things that are checked by this button. This snapshot shows all the critical errors. They are calculating future reserve deposits, check if the holding period assumption is empty, check if the close date assumption is empty, check if the total reserve cell is empty, check if the rollovers are longer than the holding period and, at last, check if the uses equal the sources. These assumptions are essential for the underwriting so I am going to take a look at how the FIX EVERYTHING button checks them and helps the user to fix them if they are incorrect.
Let’s get into the future reserve deposits. This feature has been briefly covered in the Other Assumptions section video. Its purpose is to avoid negative cash flow so the change of sign of the cash flow will not mess up the IRR and Waterfall calculation. There is no negative cash flow right now so I cannot see how this feature work. Let’s go to the Monthly Cash Flow Summary tab. I am going to add 1 million dollars expense in month 49, which is the beginning of year 5. I am doing this for the sake of showing the feature of the FIX EVERYTHING button. As a user of the ARGUS Excel model, I rarely need to input anything outside the Input tab and rent roll tab. Scrolling down. I can see the cash flow has become about negative 430,000 dollars. Let’s go back to the Input tab. Click on the input expense button for reserve deposit. I can see there is no reserve deposit for now. Close the window. Click the FIX EVERYTHING button again. I see the FIX EVERYTHING button has detected the negative cash flow. I do not have a reserve deposit schedule beforehand, so I will simply click on the Calculate Future Reserve Deposits button and let the computer figure it out for me. Alright. The error message went away. Click Okay. Let’s check if the reserve deposit changes by clicking the Input Expense again. I can see reserve deposits are made. The computer input them for me. Go back to the Monthly Cash Flow Summary tab. The previous negative cash flow is offset by the withdraw from reserve. Scrolling up. I can see about 900,000 dollars are withdrawn in month 49 to offset the shortfall and several deposits are made in the previous months to fund the reserve. This feature of the FIX EVERYTHING button is particularly powerful when there are multiple negative cash flows in the cash flow forecast. The computer will take care of all the calculations for me.
Thanks for watching this video. I will cover the rest of the features of the FIX Everything button in the next video.