Excel Formula vs Function

Updated on December 27, 2023
Edited byAshish Kumar Srivastav
Reviewed byDheeraj Vaidya, CFA, FRM

Difference Between Excel Formula Vs Function

A formula is an equation created by a user in Excel, whereas a function is a pre-defined calculation within the spreadsheet application. This comprehensive guide aims to clarify the distinctions and similarities between formulas and functions in Excel, enabling us to understand these concepts thoroughly.

Excel Formula vs Function

For instance, we utilize values and employ the PRODUCT excel function and the manual formula to calculate the desired outcome.

Excel Formula vs Function - Intro Example.jpg

Key Takeaways

  • Excel formula and excel function may sound similar but there is a huge difference. A formula is a user-created combination of mathematical operators, cell references, and values instructing Excel to carry out a specific calculation.
  • Similarly, functions are pre-built formulas provided by Excel that simplify complex calculations and reduce human error.
  • Remember, functions are categorized into various categories such as mathematical, logical, statistical, and financial.
  • Functions offer a range of predefined formulas with specific syntax that must be followed for accurate results.

What Is Excel Formula?

Excel formulas are equations or mathematical expressions that perform various calculations and automate tasks in Microsoft Excel. These formulas consist of a combination of operators, functions, cell references, and constants. They allow users to manipulate data, perform calculations, and analyze large quantities of information quickly and efficiently. Excel offers a wide range of built-in functions such as SUM, AVERAGE, COUNTIF, VLOOKUP etc., which saves time by eliminating the need for manual calculations. Formulas can be simple or complex, depending on the desired outcome.

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  1. One of the fundamental formulas in Excel for adding numbers is “a + b.”
    Let’s consider the following example: A3+A4.
    The result of this formula would be 30.
    To achieve this, we utilize the SUM excel function, which allows users to calculate the sum of values in one or more cells or ranges effortlessly.
  2. Another essential formula in Excel is calculating the average “(a + b) / 2.”
    For instance, if we have the formula =(E2+E3)/2.
    The result would also be 15.
    To accomplish this, we rely on the AVERAGE excel function, which empowers users to calculate the average value of cells or ranges easily.
  3. Although Excel does not provide a specific function for subtraction, we can still perform it manually.
    For example, if we have the formula =I4-I3.
    The result would be 10.
    We must manually input the subtraction operation to obtain the desired outcome in such cases.
Excel Formula vs Function - Formula Example.jpg

What Is Excel Function?

Excel functions are pre-built formulas that perform specific calculations or tasks in Microsoft Excel. These functions make it easier to manipulate and analyze data by automating complex calculations. Excel offers many functions, including mathematical, statistical, logical, financial, text, date and time, lookup and reference, and many others. Some commonly used Excel functions include SUM for adding up numbers, AVERAGE for calculating the average value of a range of cells, IF for evaluating conditions and returning different values based on the result, VLOOKUP for searching for specific values in a table, and COUNTIF for counting cells that meet specific criteria.

The list of some basic formulas is SUM, COUNT, COUNTA, COUNTBLANK, AVERAGE, MIN, MAX, LEN, TRIM and IF.

Excel Formula vs Function - Function Library.jpg


  1. One of the fundamental formulas in Excel is the SUM function, which allows users to calculate the sum of values in one or more cells or ranges. For instance, consider the following example:
    The result of this formula would be 30.
  2. Another essential formula in Excel is the AVERAGE function, which enables users to calculate the average value of cells or ranges. For example:
    In this basic average example, the result would also be 15.
  3. Excel provides the MIN function, allowing users to determine the minimum value among a given set of cells or ranges. For instance:
    In this case, the result would be 10.
Excel Formula vs Function - Function Example.jpg

Excel Formula Vs. Function – Similarities

Excel formulas and functions share similarities, making them essential data analysis and manipulation tools.

  • Firstly, formulas and functions are used to perform mathematical calculations and logical operations on data. They allow users to perform complex computations without requiring manual calculations or programming expertise.
  • Additionally, both formulas and functions rely on cell references to retrieve input values from different cells within a worksheet, enabling dynamic results updates when the referenced cells change.
  • Furthermore, Excel formulas and functions possess various built-in capabilities, such as statistical analysis, financial calculations, and text manipulation. These predefined functions eliminate the need for writing custom code or implementing complex algorithms, making it easier for professionals with limited coding knowledge to analyze data efficiently.
  • Both formulas and functions are used to achieve similar results, but there are notable distinctions.

Overall, the similarities between Excel formulas and functions highlight their versatility and effectiveness in performing various tasks related to data analysis in a professional environment.

Excel Formula Vs Function – Differences

  • Excel formulas and functions are powerful tools that help users perform calculations and manipulate data within a spreadsheet. However, there are some key differences between the two.
  • Formula is manually inputted into a cell and can be customized to suit individual requirements.
  • Formulas that need to be created by users from scratch functions save time by eliminating the need to manually enter lengthy instructions while ensuring consistency and accuracy across multiple cells or worksheets in an Excel file.
  • Selecting formulas or functions depends on the complexity of the task at hand – while simple calculations may only require basic formulas, more sophisticated operations generally demand specialized functions provided by Excel.
  • A formula is an equation that performs calculations on values entered into specific cells, allowing users to automate complex mathematical operations. On the other hand, a function is a built-in pre-defined operation or procedure that simplifies computations by providing an organized set of instructions. 
  • Formulas offer greater flexibility as they can be customized based on the user’s requirements, while functions provide predefined solutions for common tasks such as summing numbers or finding averages. 
  • Functions are often faster and more efficient than formulas when working with large datasets.

Excel Formula Vs Function Comparative Table

BasisExcel FormulaExcel Function
DefinitionAny input entered in a cell following an equal sign is a formula.Conversely, a function is a pre-established formula that accepts multiple arguments and produces results.
LabelingIn Excel, it is important to note that each cell can only contain a single formula.However, it is worth mentioning that the formula within a cell can encompass multiple functions. We can utilize various functions within a single formula to perform complex calculations and manipulate data effectively.
ComponentA formula in Excel may or may not incorporate any of the available functions.If we choose to utilize a function within a cell, it will invariably become an integral component of the formula.
ArgumentsA user can create a formula that incorporates multiple operators and functions.  Each function follows a predefined syntax, which outlines the required and optional arguments and the permissible argument types.

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