# Understanding simple formulas in Excel

Excel isn’t just for storing and presenting data. Its strength lies in its formulas and functions that allow all types of data calculations and analysis to be made – from simple addition and subtraction to complex what-if data analysis.

Excel uses formulas – mathematical equations – to make calculations. For example a+b=c is used to represent the calculation 2+2=4. An Excel formula always starts with an equal sign (=). This is because the cell contains, or is equal to, the formula and its value.

Excel uses standard mathematical operators in its formulas. The most commonly-used ones are:

- A plus sign for addition (+)
- A minus sign for subtraction (-)
- An asterisk for multiplication (*)
- A forward slash for division (/)

#### Create a simple formula in Excel

**Step 1** Select the cell where the answer will appear.

**Step 2** Type the equal sign (**=**).

**Step 3** Type in the values and the mathematical operator that you want Excel to calculate. For example, ‘900/30’.

**Step 4** Press **Enter**. Excel performs the calculation and the resulting value is shown in the selected cell.

**Create a simple formula in Excel using cell references**

Instead of entering the values to be used in an Excel calculation, you can use cell references. For example, instead of writing **=900/30**, you could use the cell references to identify the values such as **=D3/E3**. Using cell references in a formula has a big advantage. If you change the data in your worksheet, you don’t need to edit the formula as Excel will automatically recalculate using the new values.

**Step 1** Click the cell where you want the answer to appear.

**Step 2** Type the equal sign (**=**).

**Step 3** Type the cell reference that contains the first number in the equation.

**Step 4** Type the mathematical operator to be used in the formula, such as the addition sign (**+**).

**Step 5** Type the cell reference that contains the second number in the equation.

**Step 6** Press **Enter**. The calculation is made and the resulting value in shown in the selected cell.