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What's a formula?

In Excel, a formula is simply an expression that begins with an equal sign. A formula can be as simple as 1 + 1 or 2 + 2. However, what gives Excel so much power is that a formula can reference cells. When values in cells that have been referenced change, Excel will recalculate the formula automatically and display a new result.

Let's take a look.

All formulas in Excel must begin with an equal sign. The equal sign tells Excel that this is a formula that needs to be evaluated. When we type a formula, and press Enter, the calculation takes place instantly and we see the result.

If you forget to type an equal sign, you'll see the formula itself displayed in the cell. To fix this problem, just edit and add the equal sign.

As we select cells that contain formulas, we see the formula displayed in the formula bar and the result displayed in the cell.

You can edit the formula in the formula bar, or double-click to edit the formula in the cell. If we make changes and press Enter, the new result is displayed.

Of course, this isn't very interesting because we're doing a lot of the work ourselves changing values directly in the formulas.

Let's enter some formulas that use cell references instead of hard-coded values.

Now that we have our formulas set up, we can change the values in any of the cells that we've referenced, and Excel will immediately calculate new results.

There's no need to update the formulas. This, in a nutshell, is the power of Excel, and the power of cell references.