TL;DR Break long formulas into shorter steps. Break long sentences into short ones.
What’s the longest formula you have ever created in an Excel cell? Has it run onto two lines in the formula bar?
The problem with formulas like that is that they are unreadable. It is difficult to get the right number of brackets, etc. And it is very hard for anyone who is validating or auditing your model to check them.
Financial modelling good practice* recommends that you break such calculations into its component steps. Each step of the overall calculation would be on its own row or column. Not only is it easier to write each formula, it is also easier to understand the logic of the calculation.
How does this help us write?
When your reader reaches a full stop (period) they have a moment to reflect and make sure they understood what you wrote. Long sentences require the same mental gymnastics as long formulas.
You can reduce the cognitive load on your reader by breaking up your long sentences into short ones. Two or three or four short sentences that build up your point will be easier to understand than one long sentence.
I am not giving you a word limit for sentence length. Each sentence needs to be long enough to convey your idea to the reader. And not longer.
- If you are an accountant who does not know what constitutes financial modelling good practice go to my online course and learn the basics in under 60 minutes.