Excel formula can be quite daunting at the first instance, but this article will clarify that it is just a simple tool that saves you a lot of time and makes your work more accurate. Formulas in Excel are used to calculate, organize, and even analyze information. Learn how to understand and apply formulas in Microsoft Excel from below:

Formulas in Excel

A formula in Excel is an equation type that is used to calculate a value or to perform an operation on data in a cell. It can be as simple as basic arithmetic addition and subtraction or a very complex advanced statistical function. Each formula in Excel begins with an equal sign(=) followed by the expression or function you want to execute.
Example:
=2+2 two plus two sum up to four.
=A1+A2 Adds up the contents of cells A1 and A2.

Basic Formula Types

Let’s take a look at a few of the very simple, practical formulas you will use most often:

Addition: =A1 + A2 adds the values in cells A1 and A2.

Subtraction: =A1 – A2 subtracts the value in A2 from A1.

Multiplication: =A1*A2 Multiply the values in A1 and A2.

Division: =A1 / A2 puts the value in A1 over the value in A2.

There are some very simple formulas that can be used to make elementary calculations, but Excel comes with a vast array of built-in functions that allow you to take formulas a whole lot further.

Common Excel Functions

In Excel, functions are prebuilt formulas that can be used to save much time in doing common operations. The following are a few of the easier ones to start with:

SUM: It adds up all the numbers in a selected range.

For example: =SUM(A1:A5) adds up all the values from A1 to A5.

AVERAGE: Returns the average of the numbers in a selected range.

For example: =AVERAGE(A1:A5) returns the average value of the numbers in A1 to A5.

MIN and MAX: It returns the smallest or largest number in a selected range.

Example: =MIN(A1:A5) returns the smallest number in that range.

Example: =MAX(A1:A5) returns the largest number in that range.

COUNT: Counts the number of cells containing numbers.

For example: =COUNT(A1:A5) counts how many cells in that range contain numbers.

How to Enter a Formula in Excel

You can enter a formula in Excel this easily:

 Identify the cell in which the result of the formula is to appear.

Type the equal sign (=) before entering any formula.

Insert a formula or function; for instance =A1 + A2 or =SUM(A1:A5)

Press enter when you enter the formula.

Now in excel, if you just enter the formula =SUM(A1:A3) in A4, then excel will calculate the sum of the value in cells A1, A2 and A3 and it will output the result in A4.

Using Cell References

Cell references make the formula flexible and dynamic. You do not have to type in numbers but you can use the location of cells. For example, when you want to add the values in cells A1 and B1, simply typing =A1 + B1 will automatically change as the values in the respective cells change.

Relative References: A1 changes when you move or copy the formula to another cell.

Absolute References: $A$1 will always refer to that cell, even if you copy it elsewhere.

Excel formulas are mini-calculators that make data management a breeze for you. You can manage so much more in Excel if you know just a few basic facts about formulas and functions: remember to start every formula with an equals sign, use cell references, and practice, so you are soon an Excel formula pro.