How to Create Formulas in Excel

Easily perform calculations with powerful spreadsheet magic

Guide to using Excel formulas

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An Excel spreadsheet is helpful for displaying information in an organized way but Excel can be used for so much more. Its powerful calculation ability enables you to enter, manipulate, and analyze numbers. To take advantage of this function, you need to learn about formulas, which are essentially math equations. Here we describe how to create basic and slightly more complex formulas in Excel.

This article applies to Excel 2019, Excel 2016, Excel 2013, Excel 2010, and Excel for Office 365.

Excel Formula Basics

Writing a spreadsheet formula is different from writing an equation in math class. The most notable difference is that Excel formulas start with the equal sign (=) instead of ending with it.

Excel formulas look like =3+2 instead of 3 + 2 =.

The equal sign indicates that what follows is part of a formula and not just a word or number that you want to appear in the cell. After you type the formula and press Enter on your keyboard, the result of the formula appears in the cell.

For example, if you type the formula above, =3+2 into a cell and press Enter, the result, 5, appears in the cell. The formula is still there, but it doesn't appear in your spreadsheet. If you select the cell, though, the formula appears in the formula bar at the top of the Excel screen.

MS Excel with formula and result displayed

Improve Formulas with Cell References

Excel formulas can also be developed using cell references. Continuing with our example, you would not enter the numbers 3 and 2, but instead would name cells where these numbers have been entered (see Using Cell References below for more on cell naming). When you write a formula this way, the formula cell always shows the sum of the numbers in those cells, even if the numbers change.

Here's a real-life example of how this approach can be useful. Say you lead a team of salespeople and are tracking their monthly and quarterly sales. You want to calculate their total sales for the year. Instead of entering every quarterly sales value into a formula, you use cell references to identify the cells where those values can be found within the spreadsheet.

MS Excel with new formula displayed

Using Cell References

Each cell in Excel is part of a row and a column. Rows are designated with numbers (1, 2, 3, etc.) shown along the left side of the spreadsheet, while columns are designated with letters (A, B, C, etc.) shown along the top. To refer to a cell, use the column letter and row number together, such as A1 or W22 (the column letter always comes first). If you have a cell selected, you can see its reference at the top of the screen in the Name Box next to the formula bar.

In the image above, notice the cell references in the formula bar: E2, I2, M2, and Q2. They refer to the quarterly sales numbers for the salesperson named Jean. The formula adds those numbers together to come up with the annual sales number. If you update the numbers in one or more of those cells, Excel will recalculate and the result will still be the sum of the numbers in the referred cells.

Create a Formula With Cell References

Try creating a simple formula using cell references.

  1. First, you must populate the spreadsheet with data. Open a new Excel file and select cell C1 to make it the active cell.

    MS Excel spreadsheet with cell C1 selected
  2. Type 3 in the cell, then press Enter on your keyboard.

    MS Excel spreadsheet with one cell populated with data
  3. Cell C2 should be selected. If it's not, select cell C2. Type 2 in the cell and press Enter on your keyboard.

    MS Excel spreadsheet with two cells populated with data
  4. Now create the formula. Select cell D1 and type =C1+C2. Notice that when you type each cell reference, that cell becomes highlighted.

    MS Excel spreadsheet with two cells populated with data and formula typed into a third cell
  5. Press Enter to complete the formula. The answer 5 appears in cell D1.

If you select cell D1 again, the complete formula =C1+C2 appears in the formula bar above the worksheet.

MS Excel spreadsheet with some cells populated

Enter Cell References With Pointing

Pointing is yet another way to refer to the values you want to include in your formula; it involves using your pointer to select cells to include in your formula. This method is the fastest of those we've discussed; it's also the most accurate because you eliminate the risk of making a mistake in typing in numbers or cell references. Here's how to do it (starting with the spreadsheet from the examples above):

  1. Select cell E1 to make it the active cell and type in the equal sign (=).

    MS Excel spreadsheet with some cells populated
  2. Use your pointer to select cell C1 to enter the cell reference in the formula.

    MS Excel spreadsheet with a formula in progress
  3. Type a plus sign (+), then use your pointer to select C2 to enter the second cell reference into the formula.

    MS Excel spreadsheet with formula in progress
  4. Press Enter to complete the formula. The result appears in cell E1.

    MS Excel spreadsheet with several cells populated
  5. To see how altering one of the formula values alters the result, change the data in cell C1 from 3 to 6 and press Enter on your keyboard. Notice that the results in cells D1 and E1 both change from 5 to 8, though the formulas remain unchanged.

    MS Excel spreadsheet with some cells populated

Mathematical Operators and Order of Operations

Now we turn to operations besides addition, including subtraction, division, multiplication, and exponentiation. The mathematical operators used in Excel formulas are similar to those you may remember from math class:

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

If more than one operator is used in a formula, Excel follows a specific order to perform the mathematical operations. An easy way to remember the order of operations is to use the acronym BEDMAS.

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

Excel actually considers division and multiplication to be of equal importance. It performs these operations in the order in which they occur, from left to right. The same is true for addition and subtraction.

Here's a simple example of the order of operations in use. In the formula =2*(3+2) the first operation Excel completes is the one inside the brackets (3+2), with the result of 5. It then performs the multiplication operation, 2*5, with the result of 10. (The values in the formula could be represented by cell references rather than numbers, but Excel would perform the operations in the same order.) Try entering the formula into Excel to see it work.

Enter a Complex Formula

Now let's create a more complex formula.

  1. Open a new spreadsheet and populate it with data as follows:

    • 7 in cell C1
    • 5 in cell C2
    • 9 in cell C3
    • 6 in cell C4
    • 3 in cell C5
    MS Excel spreadsheet with some cells populated with data
  2. Select cell D1 to make it the active cell and type the equal sign followed by a left bracket (=().

    MS Excel spreadsheet with formula in progress
  3. Select cell C2 to enter the cell reference in the formula, then type the minus sign (-).

    MS Excel spreadsheet with formula in progress
  4. Select cell C4 to enter this cell reference into the formula, then type a right bracket ()).

    MS Excel spreadsheet with formula in progress
  5. Type the multiplication sign (*), then select cell C1 to enter this cell reference into the formula.

    MS Excel spreadsheet with formula in progress
  6. Type the plus sign (+), then select C3 to enter this cell reference into the formula.

    MS Excel with formula in progress
  7. Type the division sign (/), then select C5 to enter this cell reference into the formula.

    MS Excel spreadsheet with formula in progress
  8. Press Enter to complete the formula. The answer -4 appears in cell D1.

    MS Excel spreadsheet with some cells populated

How Excel Calculated the Result

In the above example, Excel arrived at the result of -4 using the BEDMAS rules as follows:

  • Brackets. Excel first carried out the operation within the brackets, C2-C4 or 5-6 for a result of -1.
  • Exponents. There are no exponents in this formula, so Excel skipped this step.
  • Division and Multiplication. There are two of these operations in the formula and Excel performed them from left to right. First, it multiplied -1 by 7 (the content of cell C1) to get a result of -7. It then performed the division operation, C3/C5 or 9/3, for a result of 3.
  • Addition and Subtraction. The last operation Excel performed was the addition of -7+3 for the final result of -4.