5. Limitations of spreadsheets for modelling

If spreadsheets are so good why not use them all the time?

The answer lies in how complicated a model needs to be.

For instance there is a limit as to how much data a spreadsheet can handle, a typical worksheet can only hold 64,000 rows of data and doing complicated calculations on 64,000 rows of data is going to bring your personal computer down to a crawl. So it is a balance of speed versus how complicated a model needs to be.

A spreadsheet is also a poor choice if the model needs to change over time as it is run, for instance the model may include an assumption that interest rate will change in a certain way over time rather than being a fixed value.

For this kind of modelling you need to leave behind spreadsheets and start to use more powerful financial simulation software - usually costing tens of thousands of pounds - plus the cost of programming the model in the first place.