A Beginner's Guide to Excel Formulas

Just learning about Excel formulas? This is the guide for you

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If you are new to Excel spreadsheets, you may find formulas intimidating. Excel formulas allow you to perform calculations on numerical data entered into a worksheet. They are used for basic number crunching, such as addition or subtraction, and for more complex calculations, such as payroll deductions, finding a student's average on test results, and calculating mortgage payments.

When a formula is entered correctly and the data used in the formula changes, Excel automatically recalculates and updates the answer.

This tutorial covers in detail how to create and use formulas and includes a step-by-step example of a basic Excel formula. It also includes a complex formula example that relies on Excel's order of operations to calculate the correct answer.

Note: If you want to add up a column or row of numbers, Excel has a built-in formula called the SUM function that makes the job quick and easy.

Excel Formula Basics

Excel formula basics.

Ted French

Writing a spreadsheet formula is a little different than writing one in math class.

Always Start With the Equal Sign

The most notable difference is that Excel formulas start with the equal sign instead of ending with it.

Excel formulas look like this:

=3 + 2

instead of:

3 + 2 =

The equal sign always goes in the cell where you want the formula's answer to appear. The equal sign informs Excel that what follows is part of a formula and not just a name or a number.

Once a formula is entered, the cell containing the formula shows the answer, rather than the formula, but the formula can always be seen in the formula bar located above the worksheet.

While this simple example works, it has one major drawback. If you need to change the data used in the formula, you need to edit or rewrite the formula.

Improving the Formula: Using Cell References

Using Cell References in Excel Formulas

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It is better to write a formula so that the data can be changed without having to change the formula itself. This is done by entering the data in worksheet cells and then informing the program which cells contain the data to be used in the formula.

This way, if the formula's data needs to change, the change is made by altering the data in the worksheet cells, rather than altering the formula itself.

To tell Excel which cells contain the data you want to use, each cell has an address or cell reference.

About Cell References

  • A cell is the intersection point between a vertical column and a horizontal row on the worksheet.
  • Each column is identified by a letter at the top of the column, such as A, B, C, and so on.
  • Each row is identified by a number located at the left edge of the row, such as 1, 2, and 3.
  • A cell reference is a combination of the column letter and row number that intersect at a cell's location – such as A1, B2, C3, or W345.
  • When writing cell references, the column letter always comes first.

To find a cell reference, look up to see which column the cell is in and then look to the left to find which row it is in.

The current cell — the reference of the cell currently clicked on — is also displayed in the Name Box located above column A in the worksheet.

So, instead of writing this formula in cell D1:

= 3 + 2

It is better to enter the data into cells C1 and C2 and write this formula instead:

= C1+C2

Excel Basic Formula Example

Using Cell References in a Basic Excel Formula

Ted French

It is usually best to enter all data into a worksheet before creating the formulas. This makes it easy to tell which cell references need to be included in the formula.

Entering data in a worksheet cell is a two-step process:

  1. Type the data in the cell.
  2. Press the Enter key on the keyboard or click on another cell with the mouse pointer to complete the entry.

Tutorial Steps

To enter data as illustrated in the example accompanying this section:

  1. Click on cell C1 to make it the active cell.
  2. Type a 3 in the cell and press the Enter key on the keyboard.
  3. Click on cell C2.
  4. Type a 2 in in the cell and press the Enter key on the keyboard.

Entering the Formula

  1. Click on cell D1, which is the location where the results of the formula will appear.
  2. Type the following formula into cell D1:
    =C1+C2 
  3. Press the Enter key on the keyboard to complete the formula.
  4. The answer 5 should appear in cell D1.
  5. If you click on cell D1 again, the complete function =C1+C2 appears in the formula bar above the worksheet.

Typing in the cell references as part of a formula is a valid way of entering them — as proven by the answer of 5 in cell D1 — it's just not the best way to do it.

Entering Cell References With Pointing

Use pointing to enter cell references in Excel

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The best way to enter the cell references in a formula is to use pointing, which involves clicking on cells with the mouse pointer to enter their cell reference in the formula. The main advantage of using pointing is that it helps eliminate possible errors caused by typing in the wrong cell reference.

This step in the tutorial uses the mouse pointer to enter the cell references for the formula in cell D2.

  1. Click on cell D2 to make it the active cell.
  2. Type the equal sign ( = ) in cell D2 to start the formula.
  3. Click on cell C1 with the mouse pointer to enter the cell reference in the formula.
  4. Type a plus sign (+).
  5. Click on cell C2 with the mouse pointer to enter the second cell reference into the formula.
  6. Press the Enter key on the keyboard to complete the formula.
  7. The answer 5 should appear in cell D2.

Updating the Formula

To test the value of using cell references in an Excel formula, change the data in cell C1 from 3 to 6 and press the Enter key on the keyboard.

The answers in both cells D1 and D2 should automatically change from 5 to 8, but the formulas in both remain unchanged.

Mathematical Operators and the Order of Operations

Excel's mathematical operators

Ted French

Creating formulas in Microsoft Excel is not difficult. It is just a matter of combining, in the right order, the cell references of your data with the correct mathematical operator.

Mathematical Operators

The mathematical operators used in Excel formulas are similar to the ones used in math class.

  • Subtraction – minus sign ( - )
  • Addition – plus sign ( + )
  • Division – forward slash ( / )
  • Multiplication – asterisk (* )
  • Exponentiation – caret (^ )

Order of Operations

If more than one operator is used in a formula, Excel follows a specific order to perform the mathematical operations.

This order of operations can be changed by adding brackets to the equation. An easy way to remember the order of operations is to use the acronym BEDMAS.

  • Brackets
  • Exponents
  • Division
  • Multiplication
  • Addition
  • Subtraction

How the Order of Operations Works

Any operation(s) contained in brackets is carried out first, followed by any exponents.

After that, Excel considers division or multiplication operations to be of equal importance and carries out these operations in the order they occur from left to right in the equation.

The same goes for the next two operations addition and subtraction. They are considered equal in the order of operations. Whichever one appears first in an equation, either addition or subtraction, is the operation carried out first.

Using Multiple Operators in Excel Formulas

Excel's order of operations in formula calculations

Ted French

This second formula example requires Excel to use its order of operations to calculate the answer.

Entering the Data

Open a blank worksheet and enter the data shown in cells C1 to C5 in the image above.

A More Complex Excel Formula

Use pointing along with the correct brackets and mathematical operators to enter the following formula into cell D1.

=(C2-C4)*C1+C3/C5

Press the Enter key on the keyboard when finished and the answer -4 should appear in cell D1. 

Detailed Steps for Entering the Formula

If you need help, use these steps to enter the formula.

  1. Click on cell D1 to make it the active cell.
  2. Type the equal sign  =  into cell D1.
  3. Type a round open bracket  (  after the equal sign.
  4. Click on C2 with the mouse pointer to enter the cell reference in the formula.
  5. Type the minus sign - after C2.
  6. Click on cell C4 to enter this cell reference into the formula.
  7. Type a round closing bracket  )  after C4.
  8. Type the multiplication sign  *  after the closing round bracket.
  9. Click on cell C1 to enter this cell reference into the formula.
  10. Type the plus sign  +  after C1.
  11. Click on cell C3 to enter this cell reference into the formula.
  12. Type the division sign  /  after C3.
  13. Click on cell C5 to enter this cell reference into the formula.
  14. Press the Enter key on the keyboard to complete the formula.
  15. The answer -4 should appear in cell D1.
  16. If you click on cell D1 again, the complete function =(C2-C4)*C1+C3/C5 appears in the formula bar above the worksheet.

How Excel Calculates the Formula Answer

Excel arrives at the answer of -4 for the formula above using the BEDMAS rules to carry out the various mathematical operations in the following order:

  1. Excel first carries out the subtraction operation (C2-C4) or (5-6), since it is surrounded by brackets and gets the result of -1.
  2. Next, the program multiplies the -1 by 7 (contents of cell C1) to get an answer of -7.
  3. Then Excel skips ahead to divide 9/3 (contents of C3/C5) because division comes before addition in BEDMAS to get a result of 3.
  4. The last operation that needs to be carried out is to add -7 + 3 to get an answer for the entire formula of -4.