Learn Formula Basics | Calculating Data Like a Pro

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The moment you type =, Excel stops storing a value and starts computing one.

A cell containing 1500 is just a stored number — it never changes unless you retype it. A cell containing =D3+D4+D5 is a relationship — it recalculates automatically whenever D3, D4, or D5 change.

Definition

Formula is an expression beginning with = that tells Excel to compute a value from operators, cell references, functions, or literal values — rather than storing a fixed number. The result updates automatically whenever any referenced cell changes.

The Arithmetic Operators

You can use Excel as a direct calculator without any cell references. Just type =2500*12 or =(1500+800)/2 directly into a cell. Useful for quick one-off calculations. The result is static though — it won't update if the numbers were meant to come from cells.

BODMAS

Excel evaluates formulas in a strict priority order, not left to right. Getting this wrong produces silent errors — the formula runs without complaint, but the number is wrong. Type a formula below to see how Excel evaluates it step by step:

B Brackets: anything inside () is evaluated first, in innermost-to-outermost order;
O Orders / Powers: exponentiation with ^ is next;
DM Division and Multiplication: evaluated left to right at the same priority level;
AS Addition and Subtraction: also evaluated left to right.

Note

=10+20/2 gives 20, not 15, because division runs before addition. To get 15: =(10+20)/2. Always use parentheses to make the intended order explicit when mixing operators. When in doubt, add brackets, they cost nothing and prevent silent errors.

The Function

Definition

Function is a built-in formula that performs a specific calculation automatically. You give it inputs, called arguments, and it returns a result. Instead of writing the logic yourself, you call the function by name and Excel does the work.

Every Excel function follows a clear pattern:

=FUNCTION_NAME(argument1, argument2, ...)

= tells Excel you're writing a formula;
FUNCTION_NAME is the operation (e.g., SUM, AVERAGE);
arguments are the inputs the function uses (numbers, cells, ranges, structured references).

Note

Excel functions use delimiters to separate arguments, but the delimiter can vary depending on your Excel version and regional settings. It can be , comma or ; semicolon.

This difference is tied to system language and number formatting (e.g., decimal separators). If a formula doesn't work, check which delimiter your Excel version expects.

The arguments can take different forms:

Type	Formula	Behaviour
Numbers (Constants)	`=SUM(10; 20; 30)`	This is useful for quick calculations, but not dynamic since values won't update automatically.
Cell References	`=SUM(A1, B1)`	This makes formulas dynamic. If the value in A1 or B1 changes, the result updates automatically.
Ranges	`=SUM(A1:A10)`	This is one of the most common argument types. It lets you apply a function across a dataset without listing each cell individually.
Structured References (Tables)	`=SUM(Income[Amount])`	Structured references are more readable and automatically expand when new data is added to the table, making them ideal for scalable models.

Calculate Total Income

Locate the Income table. In the Summary section, find the cell next to Total Income. Enter a SUM formula to calculate the total of the Income Amount column.

Your result should update automatically when values change.
Calculate Total Expenses

Locate the Expenses table. In the Summary section, find the cell next to Total Expenses. Enter a SUM formula for the Expenses Amount column.

Make sure all expense values are included in the range.
Calculate Net Balance

In the Summary section, locate the Balance cell. Create a formula that subtracts Total Expenses from Total Income.

The result should reflect your current financial position.
Test formula behavior

Change one value in the Income table and one value in the Expenses table.

Confirm that Total Income, Total Expenses, and Balance all update automatically.

Then press Ctrl + Z to undo and return to the original values.

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Section 3. Chapter 1

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Section 3. Chapter 1