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Data Analytics Lesson 4: Cell References

Data Analytics Lesson 4: Cell References

Excel operates on cell references – that is how the cells in the worksheets refer to each other. Cell references are the basis of all Excel operations. An understanding of cell references is thus critical for Excel users.

Positional Interpretation

Excel does not directly interpret the data in the cells, but rather the positions (i.e., cell names) of the cells containing the data.

For example, consider the following dataset (you may paste the bordered section in Excel):

ABCDE
1Data2017201820192020
2Sales2,000,0003,000,0004,000,0005,000,000
3Gross Profit1,400,0002,100,0002,800,0003,500,000
4Net Profit400,000600,000800,0001,000,000

To find the total sales from 2017 to 2020 and store the total sales in cell F2, we need to add up the contents in cells B2 through E2 in cell F2. We can type in cell F2 the formula = B2 + C2 + D2 + E2 (instead of typing = 2000000 + 3000000 + 4000000 + 5000000 in cell F2) to get the total sales amount of $14 million.

Using the formula is more efficient, provides less room for error, and yields the same result as manually typing the numbers. (For the simple rules of Excel calculations, see Excel Calculation Rules.)

Because the calculation is based on the cell names (i.e., B2, C2, D2, and E2), the result will immediately change to reflect any change in the content of the cell. For example, if we change the content in cell D2 to 5,000,000, the result in cell F2 will immediately change to $15 million.

Relative Reference

It is the feature of relative reference that makes it so easy and powerful to do calculations in Excel.
Under relative references, Excel automatically changes the relative positions of the cells in the formula when we copy and paste the formula.

We use the formula = B2 + C2 + D2 + E2 in cell F2 to compute the total sales. If we want to calculate the total gross profit and total net profit for the years, instead of typing the formulas = B3 + C3 + D3 +E3 and =B4 + C4 + D4 + E4, we can copy the formula in cell F2 and paste it in cells F3 and F4.

In this way, the formula from cell F2 is automatically updated to reflect the relative positions: rows 3 and 4 rather than row 2. Similarly, when pasted to cell F4, the formula will automatically change to = B4 + C4 + D4 + E4.

The following methods can be used to paste the formula:

  1. Select cell F2 through F4, press Ctrl + D to copy and paste the formula in cell F2 in cells F3 and F4.
  2. Select cell F2, hover over the bottom-right corner of the cell until the cursor changes to a “cross.” Hold and drag the cell F2 to cell F3.
  3. Select cell F2, hover over the bottom-right corner of the cell and double-click when the cursor changes to a “cross.” This will apply the formula down the rows until the cell on the left (e.g., cell E5) is empty. This is the most efficient method for most datasets with continuous data.

Absolute Reference

Consider the following example:

ABCDE
1Data2017201820192020
2Sales2,000,0003,000,0005,000,0005,000,000
3Gross Profit1,400,0002,100,0002,800,0003,500,000
4Net Profit400,000600,000800,0001,000,000

Given that the total sales from 2017 to 2020 is $15 million (stored in cell F2), what is each year’s percentage of total sales?

To find the percentage for 2017, we type the formula = B2/F2 in cell B5. However, when we try to apply (copy and paste) the formula in cell B5 to cells C5 through E5, the “#DIV/0!” error is shown.

When we look at the formulas in the cells, we can see that both the reference to the sales in each year and the reference to the total sale change. There is no content in cells G2 through I2. Thus, we are asking Excel to divide a number by zero. That’s why the “#DIV/0!” error is prompted.

Cell References displayed. Cells C5, D5, and E5 are referencing the wrong cells because of copy and paste.

Since we want to divide the sales in each year by cell F2, we should “lock” that cell so that it does not change when we copy and paste the formulas. To “lock” the cell references in B2, we need to use an absolute reference.

Here are two ways to set an absolute reference:

  1. Select the first formula (i.e., cell B5). In the formula bar, type $ before the column letter F and before the row number 2, respectively.
  2. Select the first formula (i.e., cell B5). Highlight cell F2 in the formula bar and press F4 to add the dollar signs.

Thus, when we calculate the percentage in 2017 in cell B5, we type the formula = B2/$F$2. When we apply the formula in cell B5 to cells C5 through E5, only the references to the sales in each year (i.e., C2 through E2) will be changed.

Cell references C5, D5, and E5 fixed by adding a "$".

Mixed Reference

Mixed references are combinations of relative reference and absolute reference. Part of the reference is allowed to change and part of it is “locked.” Here are some examples:

Mixed ReferenceMeaning
= $B2The column is “locked”
= B$2The row is “locked”
= B2: $F$2The last cell in the range is “locked”
= $B2 : F$2The column of the first cell and the row of the last cell in the range are “locked”

Mixed references are used in more complicated worksheets to improve efficiency and reduce manual input errors.

Learning Excel Data Analytics with Gleim

At Gleim, we know learning data analytics is vital for future accounting professionals. That is why we are offering these series of data analytics blogs and continually updating all of our CPA, CMA, and CIA Review materials with the necessary information you need to pass your exams.

We’ll continue our weekly blog series. Check back regularly for exam news and study tips!

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Excel Basics
Excel Shortcuts
Excel Calculation Rules
Cell References
Excel Functions
Function Basics
Working with Numbers
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Lookup Functions
Tables
Pivot Tables

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