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Formulas and Cell References

Lesson 2: Formulas and Cell References

What are formulas?

Formulas perform calculations using values or cell references.

  • A formula begins with an equals sign (=).
  • It can use operators: + - * / ^
  • It can use functions: SUM, AVERAGE, IF, etc.

Example: If quantity is in C2 and unit price is in D2, =C2*D2 calculates line revenue.

Relative and absolute references

Reference type

Syntax

Behaviour when copied

Use case

RelativeA2Row and column both shiftRow-by-row calculations
AbsoluteA2Never changesA fixed tax rate or exchange rate
Mixed (column fixed)$A2Row shifts, column fixedCopying across columns
Mixed (row fixed)A$2Column shifts, row fixedCopying down rows against a header

Tip: In Excel, press F4 while editing a reference to cycle through these options.

Example

Cell

Content

Meaning

B110%Discount rate
C21,000Original price
D2=C2*(1-B1)Discounted price = 900
  • B1 stays fixed when you copy the formula down, so every row uses the same discount.
  • Format B1 as a percentage so the value is easy to read (10% is stored as 0.10).

How it works

  • The spreadsheet recalculates automatically when referenced values change.
  • This makes it easy to test scenarios. Change the discount in B1 and every price update.
  • It also means a wrong input or reference flows through every dependent result.

Common mistakes

Mistake

Example

Fix

Shifted reference after copyingDiscount moves from B1 to B2, B3…Use B1
Percentage vs whole numberTyping 10 instead of 10%Format the cell as a percentage
Overwriting formulas with valuesTyping 900 over a formulaProtect formula cells; use a different colour for inputs
Hard-coding numbers in formulas=C2*0.9Put assumptions in labelled cells
Circular referencesA formula refers to itselfTrace precedents and fix the logic

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