For Finance Professionals Interpreting Inputs Is Key.
The most popular question in a classroom might be, “Will this be on the test?” A close second in a finance class just might be, “Can we use Excel on the exam?”
But what good is Excel if an aspiring finance professional can’t interpret the five primary TVM (financial calculator) inputs? This is where one needs more than one acronym to describe the variable. Enter the colon:
Photo by Brent Pritchard.
Here’s an excerpt from my book Would Your Boomerang Return? What Birds, Hurdlers, and Boomerangs Can Teach Us About the Time Value of Money (2023):
I feel the need to let you know that I’m not anti-spreadsheet; however, I’m a big proponent of using financial calculators and longhand math, as needed, to analyze and evaluate real-world Time Value of Money situations.
It always makes me laugh when one of my students—even if the student has experience in the industry—tries to tell me that financial calculators are rarely used anymore. Are you kidding me?
In my former life, with the help of Peter Dailey and others like him, our shop regularly originated an annual CML volume around $2 billion. We put those deals together using mostly pens or pencils, paper, and financial calculators.
I’ve heard all sides of the argument: one can’t email work product using a financial calculator. I didn’t say that we didn’t use computers and spreadsheets. But real money managers use financial calculators. My experience is that people who use an HP-12C have likely been around the block a time or two. I’m just saying that the “Fincalc” is the original Fintech, and they’re far from out of favor!
How well do you know the TVM keys on your financial calculator? (You’ll be using them in practice!)
Brent Pritchard is an author and college finance lecturer with over two decades of industry experience and cofounder of Boxholm Press, LLC, a family-owned-and-operated publishing company providing educational content, products, and services. He pioneers an innovative and approachable new way of learning and teaching the Time Value of Money as well as thought leadership in other business topics. His most recent book is Would Your Boomerang Return? You can contact him on his website here.