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Introduction

One of the most powerful features in Excel is the ability to calculate numerical information using formulas. Just like a calculator, Excel can add, subtract, multiply, and divide. In this lesson, we'll show you how to use cell references to create simple formulas.

Watch the video below to learn how to create formulas in Excel.

Mathematical operators

Excel uses standard operators for formulas, such as a plus sign for addition (+), a minus sign for subtraction (-), an asterisk for multiplication (*), a forward slash for division (/), and a caret (^) for exponents.

All formulas in Excel must begin with an equals sign (=). This is because the cell contains, or is equal to, the formula and the value it calculates.

Understanding cell references

While you can create simple formulas in Excel manually (for example, =2+2 or =5*5), most of the time you will use cell addresses to create a formula. This is known as making a cell reference. Using cell references will ensure that your formulas are always accurate because you can change the value of referenced cells without having to rewrite the formula.

By combining a mathematical operator with cell references, you can create a variety of simple formulas in Excel. Formulas can also include a combination of cell references and numbers, as in the examples below:

To create a formula:

In our example below, we'll use a simple formula and cell references to calculate a budget.

1. Select the cell that will contain the formula. In our example, we'll select cell B3.
   Selecting cell B3
2. Type the equals sign (=). Notice how it appears in both the cell and the formula bar.
   

   Entering the = sign

3. Type the cell address of the cell you want to reference first in the formula: cell B1 in our example. A blue border will appear around the referenced cell.
   Referencing cell B1
4. Type the mathematical operator you want to use. In our example, we'll type the addition sign (+).
5. Type the cell address of the cell you want to reference second in the formula: cell B2 in our example. A red border will appear around the referenced cell.

   
   

   Referencing cell B2
6. Press Enter on your keyboard. The formula will be calculated, and the value will be displayed in the cell.
   The complete formula and calculated value

If the result of a formula is too large to be displayed in a cell, it may appear as pound signs (#######) instead of a value. This means the column is not wide enough to display the cell content. Simply increase the column width to show the cell content.

Modifying values with cell references

The true advantage of cell references is that they allow you to update data in your worksheet without having to rewrite formulas. In the example below, we've modified the value of cell B1 from $1,200 to $1,800. The formula in B3 will automatically recalculate and display the new value in cell B3.

Excel will not always tell you if your formula contains an error, so it's up to you to check all of your formulas. To learn how to do this, you can read the Double-Check Your Formulas lesson from our Excel Formulas tutorial.

To create a formula using the point-and-click method:

Rather than typing cell addresses manually, you can point and click on the cells you want to include in your formula. This method can save a lot of time and effort when creating formulas. In our example below, we'll create a formula to calculate the cost of ordering several boxes of plastic silverware.

1. Select the cell that will contain the formula. In our example, we'll select cell D3.
   Selecting cell D3
2. Type the equals sign (=).
3. Select the cell you want to reference first in the formula: cell B3 in our example. The cell address will appear in the formula, and a dashed blue line will appear around the referenced cell.
   Referencing cell B3
4. Type the mathematical operator you want to use. In our example, we'll type the multiplication sign (*).
5. Select the cell you want to reference second in the formula: cell C3 in our example. The cell address will appear in the formula, and a dashed red line will appear around the referenced cell.
   Referencing cell C3
6. Press Enter on your keyboard. The formula will be calculated, and the value will be displayed in the cell.
   The completed formula and calculated value

Formulas can also be copied to adjacent cells with the fill handle, which can save a lot of time and effort if you need to perform the same calculation multiple times in a worksheet. Review our lesson on Relative and Absolute Cell References to learn more.

To edit a formula:

Sometimes you may want to modify an existing formula. In the example below, we've entered an incorrect cell address in our formula, so we'll need to correct it.

1. Select the cell containing the formula you want to edit. In our example, we'll select cell B3.

   
   

   Selecting cell B3
2. Click the formula bar to edit the formula. You can also double-click the cell to view and edit the formula directly within the cell.
   Selecting a formula to edit
3. A border will appear around any referenced cells. In our example, we'll change the second part of the formula to reference cell B2 instead of cell C2.

   
   

   The misplaced cell reference
   
4. When you're finished, press Enter on your keyboard or click the checkmark in the formula bar.

   
   

   Editing a formula
5. The formula will be updated, and the new value will be displayed in the cell.
   The newly calculated value

If you change your mind, you can press the Esc key on your keyboard to avoid accidentally making changes to your formula.

To show all of the formulas in a spreadsheet, you can hold the Ctrl key and press ` (grave accent). The grave accent key is usually located in the top-left corner of the keyboard. You can press Ctrl+` again to switch back to the normal view.

Challenge!

1. Open an existing Excel workbook. If you want, you can use our practice workbook.
2. Create a simple addition formula using cell references. If you are using the example, create the formula in cell B4 to calculate the total budget.
3. Try modifying the value of a cell referenced in a formula. If you are using the example, change the value of cell B2 to $2,000. Notice how the formula in cell B4 recalculates the total.
4. Try using the point-and-click method to create a formula. If you are using the example, create a formula in cell G5 that multiplies the cost of napkins by the quantity needed to calculate the total cost.
5. Edit a formula using the formula bar. If you are using the example, edit the formula in cell B9 to change the division sign (/) to a minus sign (-).

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