Excel 2007 has lots of new features available when compared to previous versions. The older Excel can be converted into new Excel format so that it can get the latest features. Excel 2007 can open a document from a previous version of Excel in Compatibility Mode, but if you need to add the latest features, then you need to convert it to 2007 format.
Whenever you open a older document in latest version, it shows compatibility mode in the title bar. To convert documents or excel sheets to new format, click on the office button on the top left hand corner and select Convert.
Once the document or excel sheet is converted, you need to save the file with a new name. Next time you open this document, the compatibility mode will not show up in the title bar. The same method can be used to convert Word documents as well.
