Module 2

Formulas , functions and Charts

What do you mean by formula?

Formulas are widely used in simple (like addition, subtraction multiplication and division)
and advanced computing. They provide the power to analyse data extensively. A formula is
an equation that performs a calculation.

Explain the process in creating formula?

1. A formula may consist of operators, cell references, range, values and functions.
2. A formula always start with an equal to (-) sign.
3. When a formula is entered in the Cell, after the Enter key is pressed, only the
calculated result is displayed in the cell and not the formula.
4. .If we make a cell, containing formula, as an active cell, though it still shows the
value, but in the formula bar, the formula is displayed.
5. Excel uses standard operators for equations, such as a plus sign for addition (+),
minus sign for subtraction (-), asterisk for multiplication (*), forward slash for
division (/), and caret (^) for exponents.

How can you insert formulas?

1. Select the cell where you want the answer to appear

2. Type the equals sign (=).

3. Type in the formula we want Excel to calculate

4. Press Enter. The formula will be calculated, and the value will be displayed in the cell.

5. 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.

Explain the components of a formula?

Cell reference

Cell reference is the format used for addressing a particular cell. Each cell is created at the
crossing of a row and a column. Therefore, every cell can be uniquely addressed using the
column and row number. A cell address is also called cell reference because Excel uses this
cell address to refer to a cell.

There are three modes of addressing in Excel:

1. Relative

2. Absolute
3. Mixed

Relative Cell Reference

Relative reference is a reference to the relative position of the cell that contains the formula
and the cells to which it refers. When we change the position of the cell that contains, the
formula changes the reference.

Absolute reference

Absolute reference is an absolute cell reference in a specific location. When we change the
position of the cell containing the formula, the absolute reference remains unchanged.
Absolute cell reference always points to the same place, even if we change the position of
any of those cells.

Mixed reference

Mixed reference is an absolute reference to column and relative to the row, or absolute to the
row and relative to the column. Mixed cell reference occurs when we use both relative and
absolute references to refer to a cell.

Mathematical operators

A formula must contain mathematical operators. There are three different types of
mathematical operators such as Arithmetic, Comparison and Reference. The following table
shows the various mathematical operators.

Operation performed Operator Symbol

Arithmetic operators:

Addition +

Subtraction -

Multiplication *

Division /

percent %

exponential ^

Comparison operators:

Equal to =
Greater than >

Less than <

Greater than or equal to >=

Less than or equal to <=

Not equal to <>

Reference operators:

Range operator :

Union operator ,

Functions

Functions are pre defined formulae in spreadsheet that return a cific result. It is a built in set
of formulae that start with an equal to sign (=). A function differs from a formula in the sense
that the mer is designed by the software and the latter is user designed. mples of functions are
SUM, AVERAGE, COUNT, MIN, MAX, etc.

Explain the functions in Excel?

Financial Functions

Microsoft Excel is the most important tool of investment Bankers and Financial Analysts.
They spent more than 70% of the time on preparing Excel Models, formulating Assumptions,
Valuations, Calculations, Graphs etc. It is safe to assume that Investment bankers are masters
in excel shortcuts and formulas. There are more than 50+ Financial Functions in Excel some
financial functions in excel are most frequently used in practical situations. NPV (Net Present
Value) & PMT are two among the commonly used financial functions in Excel.

NPV Function (Net present value)

Net present value is defined as the present value of the expected future cash flows less the
initial cost of the investment .Excel NPV function is really just a present value of uneven
cash flow function.

Excel PMT Function

The Excel PMT function is a financial function that returns the periodic payment for a loan.
The PMT function can be used to figure out the future payments for a loan, assuming
constant payments and a constant interest rate.
Mathematical Functions

 Sum()

Sum function returns the sum of the values in the range. Syntax = SUM(Range of cells)
e.g=Sum(A1:A9) or select the range and c AutoSum icon.

 Round()

It is to round a fraction number to a certain number of decimal places or to a whole number.

Syntax is =ROUND(1 Number, Number of digits) e.g-ROUND(SUM M(A1:A5),2) will
return the sum of Al to A5 ounded to 2 decimals. Number is the number we want to round.
Num digits specifies the number of digits to which we want to round number.

 FACT()

Fact() function, returns the factorial of a number. The factorial of a number is equal to
1^{*}2^{*}3^{*}...^{*}n, where n is the umber

STATISTICAL FUNCTIONS

There are more than 75 statistical functions in excel. Excel provides an extensive range of
Statistical Functions that perform calculations from basic mean, median & mode to the more
complex statistical distribution and probability tests.

Various statistical functions Some of them are Average, AVERAGEA, COUNT, MEDIAN,
MODE, STDDEV etc.

Count()

This is to count the number cells in a range that contain numerical data. Count Function will
return the number values in a range of cells. In the example C1 has the number of values in
the range of cells Al to A9.It is used to find out how many values are there or how many
students are there. Returns the number of numerical values in a supplied set of cells or values

Averages

The "mean" is the "average" we are used to, where we add up all the numbers and then divide
by the number of numbers. The "median" is the "middle" value in the list of numbers. To find
the median, our numbers have to be listed in numerical order from smallest to largest, so we
may have to rewrite our list before we can find the median. The "mode" is the value that
occurs most often. If no number in the list is repeated, then there is no mode for the list.

Average ()

Average function returns the average of set of values. One of the most used statistical
functions in Excel is Average.

STDEV()
The STDEV function calculates the standard deviation for a sample set of data. Standard
deviation measures how much variance there is in a set of numbers compared to the average
(mean) of the numbers. The STDEV function is meant to estimate standard deviation in a
sample.

Logical Functions

Logical functions are used to compare between values. There are five basic logical functions
in excel. They are IF, AND, OR, NOT, IFERROR, TRUE & FALSE.

IF Function

IF performs a logical test on the cells in the range. The basic form of the IF function is in the
form of =IF (condition, value if condition is True, value if condition is False)

AND & OR Functions

AND & OR Functions are used to link more than one condition

(Refer the examples given)

What do you mean by Macros?

A macro is an action or a set of actions that we can run as many times as we want. When we
create a macro, we are recording our mouse clicks and keystrokes. After we create a macro,
we can edit it to make minor changes to the way it works.

What do you mean by charts? Explain the different kinds of charts?

Charts are the graphic component of Excel. The data which is entered as tables can be viewed
in the graphical form as charts which makes the figures of data effective, interesting, easy to
understand, and easy to analyze and compare data.

Different kinds of charts are

 Column charts
 Bar charts
 Line charts
 Pie charts
 XY (Scatter) charts
 Area charts

Column charts

A column chart shows data changes over a period of time or illustrates comparisons among
items.

Column charts have the following chart sub-types:

  Clustered Column: This type of chart compares values across categories. It is also
available with a 3-D visual effect. Categories are organized horizontally, and values
vertically, to emphasize variation over time.
 Stacked Column: This type of chart shows the relationship of individual items to the
whole, comparing the contribution of each value to a total across categories. It is also
available with a 3-D visual effect.
 100% Stacked Column: This type of chart compares the percentage each value
contributes to a total across categories. It is also available with a 3-D visual effect.
 3-D Column: This type of chart compares data points along two axes. For example, in
the following 3-D chart, you can compare four quarters of sales performance in
Europe with the performance of two other divisions.

Bar charts

A bar chart illustrates comparisons among individual items. Bar charts have the following
chart sub-types:

 Stacked Bar: This type of chart shows the relationship of individual items to the
whole. It is also available with a 3-D visual effect.
 100% Stacked Bar: This type of chart compares the percentage each value
contributes to a total across categories. It is also available with a 3 - D visual effect.
 Clustered Bar: This type of chart compares values across categories. It is also
available with a 3-D visual effect. Categories are organized vertically, and values
horizontally, to place focus on comparing the values.

Line Chart

A line chart shows trends in data at equal intervals. Line charts can display continuous data
over time, set against a common scale, and are therefore ideal for showing trends over time.

Stacked Line: This type of chart displays the trend of the contribution of each value over
time or categories. It is also available with markers displayed at each data value.

100% Stacked Line: This type of chart displays the trend of the percentage each value
contributes over time or categories. It is also available with markers displayed at each data
value.

3-D Line: This is a line chart with a 3-D visual effect.

This type of chart displays trends over time or categories. It is also available with markers
displayed at each data value.
Pie chart

A pie chart shows the size of items that make up a data series, proportional to the sum of the
items. It always shows only one data series and is useful when you want to emphasize a
significant element in the data.

Pie: This type of chart displays the contribution of each value t a total. It is also available
with a 3-D visual effect.

Exploded Pie: This type of chart displays the contribution of each value to a total while
emphasizing individual values. It is also available with a 3-D visual effect.

Pie of Pie: This is a pie chart with user-defined values extracted and combined into a second
pie. For example, to make small slices easier to see, you can group them together as one item
in a pie chart and then break down that item in a smaller pie or bar chart next the main chart.

Area Chart

An area chart emphasizes the magnitude of change over time. Area charts have the following
chart sub-types:

Area: This type of chart displays the trend of values over time of categories. It is also
available with a 3-D visual effect. By display in the sum of the plotted values, an area chart
also shows the relationship of parts to a whole.

Stacked Area: This type of chart displays the trend of the contribution of each value over
time or categories. It is also available with a 3-D visual effect.

100% Stacked Area: This chart type displays the trend of the percentage each value
contributes over time or categories. It is also available with a 3-D visual effect. XY (Scatter)
charts XY (Scatter) charts and Line charts look very similar, especially when a Scatter chart
is displayed with connecting lines. However, there's a big difference in the way each of them
displays data. The main difference is the way each of these chart types plots data on the x-
axis. A Line chart distributes category data evenly along the horizontal category axis ( x-axis)
and distributes all value data evenly along the vertical value axis (y-axis).

Elements of a chart

The following are the elements of a chart.

1. Chart area: The entire area of chart, including all elements called chart area. The chart
aarea is bounded by an outer borde

2. Plot area: This is the area bounded by the X axis and Y axis. Th area can have its own
border as well as back ground colour.

3. Chart floor: Chart floor is the lower area on which the data points are placed. It can be
seen only in 3D charts.
4.Chart main title: This is the explanatory heading at the top of the chart.

5. Chart sub title: This tile identifies the purpose of a chart.

6. X axis: Horizontal axis in the chart is X axis.

7. Y axis: This is the vertical axis of a chart. Z axis: In case of 3D charts Z axis also will be
there.

8. Axis title: This mention the name or title for X, Y, & Z Axes.