Data visualization plays a crucial role in decision-making in the dynamic world of financial analysis. Conditional formatting in spreadsheets is a powerful tool that helps finance teams highlight key data, identify trends and relationships to key performance indicators (KPIs), and make their reports more intuitive and actionable. Whether you're using Excel or Google Sheets, mastering conditional formatting can enhance your financial analysis and make communicating insights with your team and stakeholders easier. This article guides you through the essentials of conditional formatting in both tools and provides practical examples tailored for financial analysis.

If you are new to Cube, you may want to learn more about:

• Building ranges
• Fetching or pulling data from Cube to your spreadsheet
• Scenarios such as your actuals, budgets, and forecasts

The basics of conditional formatting

First, define your range and fetch your data using the Spreadsheet add-on. Make any necessary changes or updates, and then choose which cells you would like to highlight using conditional formatting. 

In Excel

1. Select the range of data you want to format.
2. Go to the Home tab and click Conditional Formatting.
3. Choose a formatting rule, such as Highlight Cell Rules or Color Scales.
4. Customize the format style and colors to suit your data.
5. Preview and apply the formatting.

In Google Sheets

1. Select the range of data you want to format.
2. Click on Format and then Conditional formatting.
3. Set up your formatting rules in the sidebar and select the style.
4. Adjust the color scale or add custom formulas as needed.
5. Click Done to apply the formatting.

Update your spreadsheet by fetching new data

After your conditional formatting is applied to the cells, each time you refresh the data by fetching from Cube, the conditional formatting will update to reflect the changes. You can make this update go smoothly and retain your formatting by doing the following:

• Consider naming your ranges if you have multiple ranges for this workbook. 
• If you used font color as part of your conditional formatting, turn on the setting in your Spreadsheet add-on to retain font color when fetching. Learn more about Spreadsheet add-on settings. 

Conditional formatting examples 

Highlighting variances

Identifying where actual figures diverge from budgeted amounts quickly in financial reports is crucial. Conditional formatting can highlight these variances, making it easy to spot areas of over or underperformance.

Prepare your data

Your data should have separate columns for actual figures and budgeted amounts. Additionally, include a column for the variance (actual minus budgeted).

Add conditional formatting

1. Select the variance column.
2. Use Conditional Formatting to set rules for highlighting over-budget (e.g., red fill for positive variances) and under-budget (e.g., green fill for negative variances).

Identifying trends

Tracking revenue growth over time is vital for financial planning. Using conditional formatting with color scales can visually represent these trends, making it easier to identify growth patterns.

Prepare your data

Organize your data in a time series format, with revenue figures for each period (e.g., monthly or quarterly).

Add conditional formatting

1. Select the cells with revenue figures.
2. Apply a formula-based rule in Conditional Formatting to show revenue trends (e.g., green for growth, red for decline).

Complex trend identification

To gain a deeper understanding of your financial trends, particularly the magnitude of growth or decline over time, consider going the extra mile with a more sophisticated approach. By creating additional columns to calculate the percentage change between time periods, you can create a nuanced color scale that truly reflects the dynamics of your data. This method allows you to apply conditional formatting based on these calculated growth or decline percentages, offering a clearer and more precise visual representation of your financial trends. While it does require a bit more setup, the resulting clarity in understanding subtle shifts and trends in your data is well worth the effort. 

Prepare your data

Insert a column after each period containing a formula calculating the growth between the prior two periods. In the image above, these columns are minimized so only the conditional formatting rules display and not the result of the formula. 

Add conditional formatting

1. Select the cells with the percentages.
2. Use Color Scale or Icon Set in Conditional Formatting to show revenue trends (e.g., green and up arrows for growth, red and down arrows for decline).
3. Format the colors or the icons as needed. 

Emphasizing key metrics and KPIs

It's essential to draw attention to key metrics such as EBITDA or profit margin in complex financial reports. Conditional formatting can make these critical figures stand out for easy identification each time you fetch new data to your spreadsheet.

Prepare your data

Identify your key metric dimensions in Cube and note how they are named when you fetch them to your spreadsheet. 

Add conditional formatting

1. Select all cells in your sheet or the range you know you will use to fetch data.
2. Use New Rule in Conditional Formatting to create a rule with custom formatting to highlight, bold, and/or italicize cells that contain specific text (e.g., using a formula to identify the term "EBITDA" or a “%” in the row header).

Note: Cube sometimes adds formatting when fetching dimension names to rows to show the hierarchy structure. You may need to use the search function in your conditional formatting rule to prompt Excel or Google Sheets to search for a cell containing a non-exact match. This may look like the following:

=SEARCH("EBITDA",$A1)

Conditional formatting is an essential tool in the FP&A professional’s toolkit. It enhances the visual appeal of financial reports and drives focus to the most important data, enabling quicker and more informed decision-making. Incorporating these techniques into your spreadsheets allows you to transform raw data into meaningful insights, elevating your financial analysis and reporting.