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formula and financial and statistical functions

1. What is a Formula in MS Excel?

A formula in Excel is an expression used to perform calculations on numbers, text, or cell values.
Formulas can add, subtract, multiply, divide, average, count, and much more.

โœ… Every formula in Excel begins with an equal sign (=).

Example:

= A1 + B1

This formula adds the values in cell A1 and B1.


๐Ÿชœ 2. How to Insert a Formula in Excel

โžค Method 1: Manual Typing

  1. Click on a blank cell (where you want the result).
  2. Type = followed by the formula.
    Example: =A2+B2
  3. Press Enter.
    Excel calculates and displays the result.

โžค Method 2: Using Formula Bar

  1. Click the cell โ†’ Click inside the Formula Bar (above the sheet).
  2. Type your formula โ†’ Press Enter.

โžค Method 3: Using Insert Function (fx Button)

  1. Select a cell.
  2. Click the fx icon next to the formula bar.
  3. The Insert Function dialog box appears.
  4. Choose a function category (e.g., Financial, Statistical, Math).
  5. Select a function name (like SUM, AVERAGE, PMT).
  6. Enter cell references โ†’ Click OK.

๐Ÿ”ข 3. Basic Arithmetic Formulas

OperationFormula ExampleDescription
Addition=A1 + B1Adds two cells
Subtraction=A1 - B1Subtracts B1 from A1
Multiplication=A1 * B1Multiplies two cells
Division=A1 / B1Divides A1 by B1
Percentage=A1*10%Finds 10% of A1
Sum of range=SUM(A1:A10)Adds values from A1 to A10

๐Ÿ’ฐ 4. Financial Functions in Excel

Excel provides built-in financial functions used in business, banking, and accounting.

FunctionSyntaxPurposeExample
PMT=PMT(rate, nper, pv)Calculates monthly payment for a loan=PMT(10%/12, 12*2, -100000) โ†’ EMI for โ‚น1,00,000 loan
FV=FV(rate, nper, pmt, [pv])Calculates future value of investment=FV(0.08, 10, -5000) โ†’ value after 10 years
PV=PV(rate, nper, pmt)Calculates present value of investment=PV(0.1, 5, -2000)
RATE=RATE(nper, pmt, pv, [fv])Returns interest rate per period=RATE(5, -2000, 10000)
NPV=NPV(rate, value1, [value2]...)Calculates net present value of cash flows=NPV(0.1, A2:A6)
IRR=IRR(values)Calculates internal rate of return=IRR(A1:A5)
MIRR=MIRR(values, finance_rate, reinvest_rate)Modified IRR considering reinvestment=MIRR(A1:A5, 0.1, 0.12)

๐Ÿ’ก Tip: Always make sure to use negative values for payments (outflows) and positive for receipts (inflows).


๐Ÿ“Š 5. Statistical Functions in Excel

Statistical functions help summarize, analyze, and interpret data โ€” essential for reports and analytics.

FunctionSyntaxDescriptionExample
AVERAGE=AVERAGE(A1:A10)Calculates mean (average)Average marks of 10 students
MEDIAN=MEDIAN(A1:A10)Returns the middle valueMedian salary in a list
MODE.SNGL=MODE.SNGL(A1:A10)Most frequently occurring valueMode of marks
COUNT=COUNT(A1:A10)Counts cells with numbers onlyCount of numeric entries
COUNTA=COUNTA(A1:A10)Counts all non-empty cellsCounts names, text, and numbers
MAX=MAX(A1:A10)Returns largest valueHighest marks
MIN=MIN(A1:A10)Returns smallest valueLowest marks
STDEV.S=STDEV.S(A1:A10)Standard deviation of sampleSpread of data points
VAR.S=VAR.S(A1:A10)Variance of sample dataMeasure of data variation
LARGE=LARGE(A1:A10, k)kth largest value2nd highest marks
SMALL=SMALL(A1:A10, k)kth smallest value2nd lowest marks

๐Ÿงฎ 6. Example: Salary Data

EmployeeSalary
A35,000
B42,000
C38,000
D50,000
E45,000

Now we can use formulas:

FunctionFormulaResult
Average Salary=AVERAGE(B2:B6)42,000
Highest Salary=MAX(B2:B6)50,000
Lowest Salary=MIN(B2:B6)35,000
Count of Employees=COUNT(B2:B6)5
Median Salary=MEDIAN(B2:B6)42,000

๐Ÿง  7. How to Identify a Formula Easily

Every formula starts with:

=

When you click a cell with a formula, the Formula Bar displays it (e.g., =SUM(A1:A5)).


๐Ÿ’ก 8. Pro Tips

  • Use AutoSum (Alt + =) shortcut to quickly insert SUM() formula.
  • Use absolute reference ($A$1) when you donโ€™t want the cell reference to change in copy/paste.
  • Combine functions, e.g.: =AVERAGEIF(A2:A10, ">60") โ†’ Averages only values greater than 60.

๐Ÿ 9. Summary Table

CategoryFunction ExamplesPurpose
Basic MathSUM, AVERAGE, MAX, MINSimple calculations
FinancialPMT, FV, PV, RATE, NPV, IRRBusiness & loan analysis
StatisticalCOUNT, MEDIAN, MODE, STDEVData analysis
LogicalIF, AND, ORConditional testing
TextLEFT, RIGHT, CONCAT, LENManipulate text
Date/TimeTODAY, NOW, DATEDIFManage dates