In this lecture, we will look at some different ways to lay out all the elements of a model on a spreadsheet, with distinctive locations for assumptions, decision variables, objectives or outcome variables, and the functions that express the logic that connect these variables together. We also look at using range names to help keep track of the logic in our formulas, and to avoid introducing errors. So now, let's turn to the spreadsheet. It's good practice to make your thinking in a model transparent. Don't bury your assumptions within calculations or directly inside the formulas of the spreadsheet. Instead, reference your assumptions using cell addresses, clearly labeled. And put them where they can be easily changed. As in this case, in which B11 references the forecast return rate, which is then later used, in cell C27, for calculating returns and allowances for the month of January. I've also used the color blue to highlight key assumptions. The use of range names can help with making your logic transparent in formulas. Previously I created a range name for total expenses and another for total revenues. To do that I pointed to a particular range, in this case total cash receipts. And chose to define a name. Similarly, I pointed to total cash expenditures, And defined another name. To show how to use those names, let me replicate this margin formula. In this case I'm going to say that the value to calculate for the margin would equal total cash receipts. So notice it's pulling up my list of range names that I created. Minus total expenses. Divided by total cash receipts. I'll put parentheses around these two, to make certain that the, processing order is correct. And you'll notice I get the same value as I did with the calculation for the margin I created earlier. After you create a model that clearly represents your best thinking about the future, you can update the theoretical numbers with actual sales. So, for example, we projected 12 unit sales in January. If it comes in at 9, we can simply change the formula to the actuals. As time moves forward, as you replace projected numbers with actuals, you can develop a more specific forecast for this particular time frame.