Excel Basic Formulas

Formulas are the heart of Excel. A formula is an instruction given to Excel to perform a calculation. Instead of manually doing math, a formula can instantly calculate results — and those results automatically update whenever the data changes.

This topic covers how formulas work, the operators used in formulas, and how to write simple formulas for addition, subtraction, multiplication, and division.

What is a Formula?

A formula is an expression entered in a cell that tells Excel to compute a value. Every formula in Excel begins with an equals sign (=). Without the equals sign, Excel treats the entry as plain text.

Structure of a Formula

  = [value or cell reference] [operator] [value or cell reference]

  Examples:
  =5+3          → result: 8
  =A1+B1        → adds the value in A1 and the value in B1
  =C2*D2        → multiplies the values in C2 and D2

Arithmetic Operators

Excel uses standard mathematical symbols called operators to perform calculations.

List of Arithmetic Operators

• + (Plus): Addition — Example: =10+5 → 15
• - (Minus): Subtraction — Example: =10-5 → 5
• * (Asterisk): Multiplication — Example: =10*5 → 50
• / (Slash): Division — Example: =10/5 → 2
• ^ (Caret): Exponentiation (power) — Example: =2^3 → 8 (2 to the power of 3)
• % (Percent): Percentage — Example: =20% → 0.2

Writing a Simple Formula

Step-by-Step Example

  Suppose:
  Cell A1 contains: 100
  Cell A2 contains: 50

  To add them:
  1. Click on cell A3.
  2. Type: =A1+A2
  3. Press Enter.
  4. Cell A3 will display: 150

If the value in A1 is changed to 200, A3 will automatically update to 250. This is the power of formulas — they recalculate automatically.

Formulas with Cell References vs. Direct Numbers

A formula can use direct numbers or cell references. Cell references are preferred because they update automatically when data changes.

Direct Numbers (Hard-Coded)

  =100+50   → always gives 150, never changes

Cell References (Dynamic)

  =A1+A2    → updates automatically when A1 or A2 changes

Using cell references makes spreadsheets flexible and reusable.

Four Basic Formula Examples

1. Addition

  Cell A1: 300
  Cell B1: 150
  Formula in C1: =A1+B1
  Result: 450

2. Subtraction

  Cell A2: 500
  Cell B2: 200
  Formula in C2: =A2-B2
  Result: 300

3. Multiplication

  Cell A3: 40   (units sold)
  Cell B3: 25   (price per unit)
  Formula in C3: =A3*B3
  Result: 1000  (total sales)

4. Division

  Cell A4: 900  (total revenue)
  Cell B4: 3    (number of months)
  Formula in C4: =A4/B4
  Result: 300   (average monthly revenue)

Combining Multiple Operators

Multiple operations can be combined in a single formula. Excel follows the standard mathematical order of operations:

1. Brackets (parentheses) are calculated first.
2. Then exponents (^).
3. Then multiplication (*) and division (/).
4. Finally addition (+) and subtraction (-).

This order is sometimes remembered as BODMAS or PEMDAS.

Example Without Parentheses

  =5+3*2
  → Multiplication is done first: 3*2 = 6
  → Then addition: 5+6 = 11
  Result: 11

Example With Parentheses

  =(5+3)*2
  → Parentheses are calculated first: 5+3 = 8
  → Then multiplication: 8*2 = 16
  Result: 16

Always use parentheses when the intended order of calculation is different from the default.

A Practical Example: Invoice Calculation

  | A          | B         | C         | D          |
1 | Item       | Quantity  | Unit Price| Total      |
2 | Pencil     | 10        | 5         | =B2*C2     |
3 | Eraser     | 5         | 8         | =B3*C3     |
4 | Notebook   | 3         | 50        | =B4*C4     |
5 |            |           | Subtotal  | =D2+D3+D4  |
6 |            |           | Tax (10%) | =D5*10%    |
7 |            |           | Grand Total| =D5+D6   |

Each formula in column D is calculated automatically. If the quantity or price changes, all totals update instantly.

Viewing Formulas in Cells

By default, Excel shows the result of a formula, not the formula itself. To see all formulas across the spreadsheet:

• Press Ctrl + ` (the backtick key, usually above the Tab key).
• Press it again to switch back to showing results.

Common Errors in Formulas

• #DIV/0! — Attempting to divide by zero or an empty cell.
• #VALUE! — A formula includes text where a number is expected.
• #REF! — A cell reference in the formula no longer exists (the cell was deleted).
• #NAME? — Excel does not recognize the formula name (often a typo).

Summary

• Every formula in Excel starts with an equals sign (=).
• Arithmetic operators: + (add), - (subtract), * (multiply), / (divide), ^ (exponent).
• Cell references make formulas dynamic — they update automatically when data changes.
• Order of operations (BODMAS/PEMDAS) determines which part of a formula is calculated first.
• Parentheses override the default order of operations.