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Understanding Microsoft Excel Cell References
In Microsoft Excel, a cell reference is how you refer to an address or location. In its simplest form, a cell list is just a placeholder, such as A1, which is the intersection of Column A and Row 1.
Understanding your options for Excel cell references is important to the accuracy and success of your calculations. When you create formulas, you may work with more than one type of cell reference.
In Microsoft Excel, there are 3 types of references:
Circular (which you do NOT want in a worksheet)
Compound references are a combination of relative and absolute.
The default structure of a formula in Excel is that the formula is automatically adjusted when you copy a formula from one cell to another. This adjustment is known as relative reference, that is, which adjusts the contents of a new formula to the corresponding (or based) formula. This behavior in Excel cell references is due to updating and editing formulas when you copy or move formulas.
When you don’t want cell references to change when a formula is copied to a different cell, you must set one or more values to be fixed. This is called absolute reference. Absolute cell references are often used when a formula refers to a constant value in a worksheet, such as an interest rate, labor cost, or projection rate. An absolute cell reference says “exactly or always use this value regardless of the formula space.” It’s a GPS of a formula – it’s an exact location regardless of your starting location.
You can create absolute reference for a constant by placing a $ in front of the column and/or line space that does not change. You can also specify a part of a formula as an absolute by highlighting the cell and pressing the cell [F4] function key.
Examples of absolute (or complex) cell references are:
When creating a formula, print it [F4] times to change the cell reference from a pure absolute reference, mixed references, or back to a relative reference.
A complex cell reference is really just a formula or cell with relative and absolute references. For example, if you want to consistently look at the values in Row 4 but copy the formula across each column, the cell reference to the value might be B$4 which updates to C$4 when a column to the right is copied.
A circular reference occurs when a cell in an Excel worksheet refers to itself, directly or indirectly. For example, if =100+B2 is entered in cell B2, a direct circular reference has been created. An indirect circular reference is when a formula in a given cell refers to one or more other cells that refer back to the base cell. For example, the formula in C1 returns cell C2, C2 to C3, and C3 to C1.
When Excel encounters a circular reference in a worksheet, a Circular Reference Warning appears in a dialog box when the workbook is first opened. You can ignore the circular reference or you can place it to edit the worksheet. STOP! Ignoring circular references risks your data being inaccurate and may lead to bad decisions. Unfortunately, because many Excel users do not understand circular references, they click on the warning without any further action.
If you see the Circular Reference dialog box, click OK, and then follow the problem references to correct the formula logic:
Look at the status bar. If you see the message Circular References followed by a cell then the error is on the active worksheet. If not, navigate to other worksheets in the workbook until you find the worksheet with one or more cell references. -OR-
Even easier with multiple worksheets, choose Formula > Error Checking > Circular References which shows you circular references in open workbooks.
Excel circular references are usually visually marked in the worksheet with a green marker in the upper left corner of the cell.
Understanding the various cell references in formulas is one of the keys to accurate results and success in Microsoft Excel. This is the key to building simpler and more successful formulas.
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