One of the most powerful features in Excel is the ability to **calculate **numerical information using **formulas**. Just like a calculator, Excel can add, subtract, multiply, and divide. In this lesson, we'll show you how to use **cell references** to create simple formulas.

Optional: Download our practice workbook.

Watch the video below to learn how to create formulas in Excel.

Excel uses standard operators for formulas, such as a **plus sign** for addition (**+**), a **minus sign** for subtraction (**-**), an **asterisk** for multiplication (*****), a **forward slash** for division (**/**), and a **caret** (**^**) for exponents.

Standard operators

All formulas in Excel must begin with an **equals sign** (**=**). This is because the cell contains, or is equal to, the formula and the value it calculates.

While you can create simple formulas in Excel manually (for example, **=2+2** or **=5*5**), most of the time you will use **cell addresses **to create a formula. This is known as making a **cell reference**. Using cell references will ensure that your formulas are always accurate because you can change the value of referenced cells without having to rewrite the formula.

Using cell references to recalculate a formula

By combining a mathematical operator with cell references, you can create a variety of simple formulas in Excel. Formulas can also include a combination of cell references and numbers, as in the examples below:

Examples of simple formulas

In our example below, we'll use a simple formula and cell references to calculate a budget.

- Select the
**cell**that will contain the formula. In our example, we'll select cell**B3**.Selecting cell B3 - Type the
**equals sign (=)**. Notice how it appears in both the**cell**and the**formula****bar**.Entering the = sign

- Type the
**cell****address**of the cell you want to reference first in the formula: cell**B1**in our example. A**blue border**will appear around the referenced cell.Referencing cell B1 - Type the
**mathematical operator**you want to use. In our example, we'll type the**addition sign**(**+**). - Type the
**cell address**of the cell you want to reference second in the formula: cell**B2**in our example. A**red border**will appear around the referenced cell.Referencing cell B2 - Press
**Enter**on your keyboard. The formula will be**calculated**, and the**value**will be displayed in the cell.The complete formula and calculated value

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.

The true advantage of cell references is that they allow you to **update** **data** in your worksheet without having to rewrite formulas. In the example below, we've modified the value of cell B1 from $1,200 to $1,800. The formula in B3 will automatically recalculate and display the new value in cell B3.

The recalculated cell value

Excel **will not always tell you** if your formula contains an error, so it's up to you to check all of your formulas. To learn how to do this, you can read the Double-Check Your Formulas lesson from our Excel Formulas tutorial.

Rather than typing cell addresses manually, you can **point and click** on the cells you want to include in your formula. This method can save a lot of time and effort when creating formulas. In our example below, we'll create a formula to calculate the cost of ordering several boxes of plastic silverware.

- Select the
**cell**that will contain the formula. In our example, we'll select cell**D3**.Selecting cell D3 - Type the
**equals sign (=)**. - Select the
**cell**you want to reference first in the formula: cell**B3**in our example. The**cell address**will appear in the formula, and a**dashed blue line**will appear around the referenced cell.Referencing cell B3 - Type the
**mathematical operator**you want to use. In our example, we'll type the**multiplication sign (*)**. - Select the
**cell**you want to reference second in the formula: cell**C3**in our example. The**cell address**will appear in the formula, and a**dashed red line**will appear around the referenced cell.Referencing cell C3 - Press
**Enter**on your keyboard. The formula will be**calculated**, and the**value**will be displayed in the cell.The completed formula and calculated value

Formulas can also be **copied** to adjacent cells with the **fill** **handle**, which can save a lot of time and effort if you need to perform the** same calculation** multiple times in a worksheet. Review our lesson on Relative and Absolute Cell References to learn more.

Copying a formula to adjacent cells using the fill handle

Sometimes you may want to modify an existing formula. In the example below, we've entered an incorrect cell address in our formula, so we'll need to correct it.

- Select the
**cell**containing the formula you want to edit. In our example, we'll select cell**B3**.Selecting cell B3 - Click the
**formula bar**to edit the formula. You can also**double-click**the cell to view and edit the formula directly within the cell.Selecting a formula to edit - A
**border**will appear around any referenced cells. In our example, we'll change the second part of the formula to reference cell**B2**instead of cell**C2**.The misplaced cell reference - When you're finished, press
**Enter**on your keyboard or click the**checkmark**in the formula bar.Editing a formula - The formula will be
**updated**, and the**new value**will be displayed in the cell.The newly calculated value

If you change your mind, you can press the **Esc** key on your keyboard to avoid accidentally making changes to your formula.

To show all of the formulas in a spreadsheet, you can hold the **Ctrl** key and press **`** (grave accent). The grave accent key is usually located in the top-left corner of the keyboard. You can press **Ctrl+`** again to switch back to the normal view.

- Open an existing Excel workbook. If you want, you can use our practice workbook.
- Create a simple addition formula using
**cell references**. If you are using the example, create the formula in cell**B4**to calculate the total budget. - Try modifying the
**value**of a cell referenced in a formula. If you are using the example, change the value of cell**B2**to $2,000. Notice how the formula in cell B4 recalculates the total. - Try using the
**point-and-click method**to create a formula. If you are using the example, create a formula in cell**G5**that multiplies the cost of**napkins**by the**quantity**needed to calculate the**total cost**. **Edit**a formula using the formula bar. If you are using the example, edit the formula in cell**B9**to change the**division sign**(**/**) to a**minus****sign**(**-**).