Formulas vs Functions

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How They Differ

The words Formula and Function are often used interchangeably, but they don’t mean the same thing. At the very core level, they are similar. However, it may help you understand them better if we break them down and view them as different from one another.


Think of Formulas as mathematical calculations on the data in your worksheet. You manually create them. You tell Excel which cells to use, and you define which operators to use. A formula always starts with an equal sign (=), followed by numbers (or cell references)  and math operators.

Example: Multiply the Sub Total by the Tax Rate using cell reference times (*) cell reference.


Functions are predefined calculations built-in to Excel. You’ll use specific values, called arguments, in a particular order to tell Excel which cells to use when calculating the Function. Like formulas, functions also begin with an equal sign (=). The equal sign is followed by the NAME of the function and a set of parenthesis. Inside the parenthesis is where you provide the arguments.

Example: Add up all the items by using the SUM function, with the cell values of the items as the arguments.

Used Together

In any given Excel workbook, it’s likely that you’ll use both Formulas and Functions. You’ll use simple Formulas for simple math, and simple Functions with simple arguments. Sometimes, you’ll mix Formulas and Functions together in the same cell.

Example: Use a mixed Formula/Function to calculate the tax amount. Sum the item list, then multiply it by the Tax Rate.

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