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Chapter 4. Creating Advanced Formulas > Using Iteration and Circular References

Using Iteration and Circular References

A common business problem involves calculating a profit-sharing plan contribution as a percentage of a company's net profits. This isn't a simple multiplication problem because the net profit is determined partly by the profit-sharing figure. For example, suppose that a company has a gross margin of $1,000,000 and expenses of $900,000, which leaves a gross profit of $100,000. The company also sets aside 10% of net profits for profit sharing. The net profit is calculated with the following formula:

Net Profit = Gross Profit - Profit Sharing Contribution


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