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### Understanding Excel Formulas

One way to add calculations to an Excel workbook is to create your own formulas. Formulas are typically used to perform calculations such as addition, subtraction, multiplication, and division. More complex calculations are better left to Excel Functions, which is a built-in set of formulas that provide financial, mathematical, and statistical calculations. You learn more about functions in Lesson 5, "Performing Calculations with Functions."

Formulas that you create typically include cell addresses that reference cells on which you want to perform a calculation. Formulas also consist of mathematical operators, such as + (addition) or * (multiplication). For example, if you wanted to multiply two cells, such as C3 and D3, and then divide the product by 3, you would design a formula that looks like this:

```=(C3*D3)/3
```

Notice that the formula begins with the equal sign (=). This lets Excel know that the information that you are placing in the cell is meant to do a calculation. The parentheses are used to let Excel know that you want C3 multiplied by D3 before the result is divided by 3. Creating appropriate formulas requires an understanding of the order of mathematical operations, or what is often called the rules of precedence. The natural order of math operations is covered in the next section.

As previously mentioned, you can create formulas that add, subtract, and multiply cells in the worksheet. Table 3.1 lists some of the operators that you can use and how you would use them in a simple formula.

##### Table 3.1. Excel's Mathematical Operators
Operator Performs Sample Formula Result
^ Exponentiation =A1^3 Enters the result of raising the value in cell A1 to the third power
+ Addition =A1+A2 Enters the total of the values in cells A1 and A2
Subtraction =A1–A2 Subtracts the value in cell A2 from the value in cell A1
* Multiplication =A2*A3 Multiplies the value in cell A2 by cell A3
/ Division =A1/B1 Divides the value in cell A1 by the value in cell B1

Figure 3.1 shows some formulas that have been created for an Excel worksheet. So that you can see how I wrote the formulas, I've configured Excel so that it shows the formula that has been placed in a cell rather than the results of the formula (which is what you would normally see).

##### Figure 3.1. You can create formulas to do simple calculations in your worksheets.

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