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  Build a formula

Building formulas in Excel: an eight-step approach

Step Screen and explanation Comments
1:
Select the cell where you wish the formula result to appear.
In this example, we intend to calculate profits (in cell B3) by subtracting expenses from revenues. So we begin by placing the cursor in cell B3.
2:
Type an = (this lets Excel know that you're starting the formula).
 

The = shows in the formula bar and in the cell indicated by the cursor. The formula bar goes active, with red Cancel, green Enter, and black Edit Formula icons.

n.b. The function drop-down list in the left side of the formula bar also goes active. In this case, it suggests using the SUM function, because Excel is guessing (incorrectly) that you want to add the numbers in the cells above the cursor.
3:
Using the cursor, click on the first cell that you wish to have included in the formula.
Excel selects 1,000 (the revenues figure), and adds its cell location (B1) to the formula.
4:
Type the arithmetic operator (i.e., +,-,*,/,( ) that you wish to use in the formula. This locks in the cell that you just pointed to, and tells Excel what you want to do with it.
Typing the minus sign (-) locks in cell B1 as part of the formula. Excel is now waiting for you to show it the next location to build into the formula.
5:
Using the cursor, point at (e.g., click on) the next cell you wish to have included in the formula.
Clicking on the cell that contains 800 adds its location (i.e., B2) to the formula. Note that you do not need to worry about the exact location of the number: all you have to do is click on it.
6:
Type the next arithmetic operator. Note that you can use parentheses for more complex formulas.
In this example, the equation is now finished: all you have to do is hit the Enter key. See step 8 below.  
7:
Continue steps 3 to 6 until your formula is complete.
   
8:
Press the Enter key to finish building the formula. The cell you selected in step 1 should now show the result.
Pressing Enter places the formula in cell B3 and moves the cursor down one row to cell B4. To see the formula again, click on cell B3 and look at the formula bar.
Learn more

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See a video summarizing the 8 steps of building a formula.
  If you wish to revise your formula, use the following techniques:

Editing Formulas

Step Screen and explanation Comments
If you wish to see your formula again, place the cursor on the cell that holds it. You will see the formula in the formula bar: Here we have placed the cursor on cell B3 again. The formula we built now shows in the formula bar.
If you wish to edit the formula, press F2 at this point. The formula bar will go active, and each reference in the formula will be color-coded to its appropriate position on the spreadsheet. The blue cell shows the formula's reference to the revenues figure. The green cell shows the formula's reference to expenses (e.g., 800 in cell B2).