Introduction

In this lesson, you will learn about the concept of functions in Excel. There are many different functions in Excel that allow you to perform complex calculations quickly.

You can view some of the functions in Excel by inserting an equal sign (=) and a letter in one of the Excel cells. A drop down list will appear with functions that begin with the letter you chose.

Figure 1

This video illustrates the lesson material below. Watching the video is optional.

• Functions in Excel (3:39 mins) | Transcript

Functions in Excel

Functions have two parts, a name and arguments.

Name
The function name is usually a shortened description of what the function does. For example, the SUM function stands for “summation” or the process of adding things up. The PMT function stands for the word “payment” and calculates the payment on a loan.

• SUM
• PMT

Arguments
The arguments within a function are the variables that the function needs in order to do its calculation. For example, the arguments of the SUM function are the numbers or referenced cells that you want to add together. The arguments of the PMT function are rate, nper, pv, fv, and type. The arguments within a function are contained in parentheses and separated by commas. The following text shows how the SUM function and payment function and their corresponding arguments are entered into a cell in Excel.

• =SUM(2, A3, B4, …)
• =PMT([rate], [nper], [pv], [fv], [type])

Example 1
Use the SUM function in Microsoft Excel to add 3 and 4.

To insert a function into a cell, enter the equal sign (=) and type in the name of the function you want to use. Once you begin typing a drop-down list will appear. Select the SUM function as an example:

• =SUM

Add the arguments in parentheses:

• =SUM(3,4)

Remember to close the parentheses and press Enter.

Once you do this, a 7 will replace the formula in the cell. The formula can still be found in the formula bar when you select the cell.

Example 2
Use the SUM function in Microsoft Excel to add the numbers within these two cell references: cell B2, which contains 8, cell C2, which contains 2.

After entering the SUM function name, you can type the arguments or click on the cells to reference them:

• =SUM(B2:C2)

Figure 2

After pressing Enter, the SUM formula will calculate and enter the answer into the cell automatically: 10.

Figure 3

PMT Function

You can select each name within the function and Excel will bring up a help screen that will tell you what each of the arguments mean.

Figure 4

It’s important to put the arguments in the Excel function in the right order. If you enter the values for the arguments in the wrong order, Excel will calculate the wrong answer.

Things to Remember

• The name of a function in Excel is usually a shortened version of what the function does. For example: Summation =SUM, Payment =PMT.
• The function argument is the content within the parentheses of a function.

Practice Problems

1. What are the two parts of a function?
2. What word best describes the arguments of the function?
3. How do you call up or use a function in Excel?
4. Where do the arguments go in a function in Excel?
5. What goes between the arguments if there is more than one argument?

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