In Microsoft Excel, a formula is an expression you create to perform calculations, manipulate data, or automate tasks within a spreadsheet. Formulas allow you to work with the data in your Excel worksheets dynamically, updating results automatically when the input data changes.

Formulas can combine the following elements:

  1. Operators: These are symbols used for mathematical operations. Common operators include:
    • + for addition
    • – for subtraction
    • * for multiplication
    • / for division
    • ^ for exponentiation
    • % for percentage
  2. Cell References: You can reference cells in your spreadsheet by their addresses (e.g., A1, B2, C3) or by using named ranges (defined cell ranges with descriptive names).
  3. Values: These are constants or numbers that you can include in your formulas (e.g. 5, 10.55, “Hello”)
  4. Functions: Excel offers a wide range of built-in functions for performing various calculations. Functions are typically written in the form =FUNCTION_NAME(arguments) and perform specific tasks. Examples include SUM(), AVERAGE(), IF(), and many more.

Here are a few examples of Excel formulas:

  • Simple Addition: =A1 + A2 adds the values in cells A1 and A2.
  • Average Calculation: =AVERAGE(B1:B10) calculates the average of the values in cells B1 through B10.
  • Conditional Calculation: =IF(A1 > 10, “Yes”, “No”) checks if the value in cell A1 is greater than 10 and returns “Yes” or “No” accordingly.
  • Percentage Calculation: =B1 * 0.1 calculates 10% of the value in cell B1.

Formulas in Excel are dynamic, meaning they automatically recalculate when the values in the referenced cells change. This feature makes Excel an excellent tool for performing complex calculations, data analysis, and creating interactive spreadsheets.

You can enter a formula into a cell by starting with an equal sign (=) followed by the formula expression. Once entered, Excel will display the calculated result in the cell. Formulas can be as simple or as complex as needed to perform the desired calculations and operations on your data.

Difference between Functions and Formulas

In Microsoft Excel, formulas and functions are related but distinct concepts. They both involve performing calculations or operations on data within a spreadsheet, but they have key differences:


  • function in Excel is a pre-built operation or calculation that takes one or more inputs (arguments) and returns a result.
  • Functions are predefined by Excel and have specific names, such as SUM, AVERAGE, IF, VLOOKUP, etc.
  • Functions are designed to perform common tasks and calculations, making it easier to perform complex operations without having to write the entire calculation manually.
  • Functions are entered into a cell with a specific syntax, typically beginning with an equal sign (=), followed by the function name and its arguments enclosed in parentheses. For example: =SUM(A1:A5).
  • Excel provides a wide range of functions for various purposes, including mathematical, statistical, logical, text manipulation, date and time, and more.


  • A formula in Excel is a user-defined calculation or expression that you create by combining operators, cell references, and values to perform a specific calculation.
  • Formulas are flexible and allow you to create custom calculations tailored to your specific needs.
  • Formulas can include a combination of arithmetic operators (+, -, *, /), cell references (e.g., A1, B2), values (e.g., 10, “Hello”), and functions.
  • Formulas are also entered into a cell with an equal sign (=), but they are not predefined functions. Instead, you define the calculation explicitly.
  • Examples of formulas include =A1 + B1 to add the values in cells A1 and B1 or =IF(A1 > 10, “Yes”, “No”) to create a custom conditional statement.

In summary, functions in Excel are pre-built, predefined operations or calculations provided by Excel. Whereas, formulas are user-defined calculations that you create by combining various elements, including operators, cell references, values, and functions.
Both functions and formulas in excel are essential tools for performing calculations and data manipulation in Excel, but they serve different purposes and offer varying levels of flexibility and customization.