Introduction to Microsoft Excel

Online Workbook

Basic Statistics for Business and Management

Students
Using Excel and IBM SPSS Statistics

This online workbook is intended to provide students with an introduction to the Microsoft
Excel software package.

The document is available online to download for customers who have purchased the
textbook Basic Statistics for Business and Management Students - Using Excel and IBM SPSS
Statistics.

Created by Glyn Davis & Branko Pecar

Introduction to Microsoft Excel
Thursday, 01 October 2020

1
INTRODUCTION TO MICROSOFT EXCEL 4

Overview 4

Learning objectives 5
SECTION 1 INTRODUCTION TO MICROSOFT EXCEL 5

Components of an Excel spreadsheet 5

Loading Excel 6

Task panes 7

Help 8

Saving a workbook 8

Opening an existing workbook 9

Closing a workbook 10

Switch to a new worksheet 10

Creating a new worksheet 10

Opening a new workbook 10

Printing and print preview 11

What to do if you encounter a damaged Excel file? 11

SECTION 2 ENTERING DATA AND FORMATTING 12

Entering data in a cell 12

Modifying data in a cell 13

Entering data into a range 13

Cancelling a cell entry 14

Undoing a cell entry or repeating a cell entry 14

Entering numbers 14

Entering dates or times 14

Entering text 15

Formatting a worksheet 15

Column widths and row heights 16

Naming a worksheet 18

2
Inserting and deleting rows and columns 18

The clear command 19

Spell checking 19
SECTION 3 PERFORMING CALCULATIONS 20

Entering formulae 20

Understanding operators 20

Selecting cells and moving around worksheet 20

Reference operators 21

Editing a formula 22

Creating and applying names 22

Copying formulas to adjacent cells 24

Using absolute and relative references 25

IF function 26

Adding a column of numbers using AutoSum 27

What if analysis 28

Insert function 29
SECTION 4 STATISTICS WITH EXCEL 30

Descriptive statistics 30

Using a function 31

Microsoft Excel functions 33

Excel Data Analysis add-in 40

SUMMARY 46
EXCEL - RECOMMENDED ONLINE SUPPORT 46

3
Introduction to Microsoft Excel
Microsoft Excel provides a series of tools that can be used to undertake the analysis of data sets as
well as a presentation tool for reporting your results. It is assumed that you are familiar with
Microsoft Windows and know how to perform tasks such as accessing commands from the menus
on the menu bar, selecting items and entering information into a dialog box. This online workbook
describes Microsoft Excel 2016, which is part of the Office suite of programmes, and focuses on the
Excel skills required to enable the Excel user to undertake the statistical tests described within each
chapter of the textbook.

Overview

A spreadsheet is a table of cells arranged in rows and columns. The data values in each cell can take
many forms, such as text, dates, times, and numbers (including currency and percentages). The
relationships between cells are called formulae. If you change the value in a cell, the contents of any
cells that depend on that value will change automatically. This enables you to study what-if
scenarios. Excel can create and manipulate spreadsheets (which are called worksheets). Excel can be
used to enable calculations involving numbers, for example: (a) creating a family budget, (b)
calculating mortgage payments, and (c) undertaking a range of statistical and non-statistical
calculations. Furthermore, it is good at creating tables and graphs as illustrated in Figure WExcel1.1
below.

Figure WExcel1.1

4
The textbook is concerned with the application of the Excel spreadsheet to solve business statistics
focused problems.

Learning objectives

On successful completion of this workbook you will be able to:

• Create a new Excel workbook and worksheets.

• Save and close workbooks.
• Format cells.
• Select a cell or a range of cells.
• Select a range of cells.
• Enter data into a cell or a range of cells e.g. numbers, text.
• Create and modify cell formulas.
• Create and apply names to a cell range.
• Print worksheets and workbooks and apply preview before printing worksheets.
• Understand that Excel can create a table and chart.
• Apply Excel functions to solve statistical problems.
• Load Excel Analysis ToolPak add-in to solve a range of statistical problems.
• Insert an Excel worksheet and chart into Microsoft Word.

Section 1 Introduction to Microsoft Excel

A spreadsheet is basically a document which has been divided into rows and columns. Excel is
designed to ease the management of numbers and calculations. Various menu commands and
buttons make it easy to arrange and format columns of numbers and to calculate totals, averages,
percentages, financial, statistical and scientific formulas. The look of a spreadsheet application
derives from the account ledgers that have been used to keep records for centuries. Ledger pages
are lined off into rows and columns to record such things as items in inventory, income and
expenses, debits and credits. The biggest advantage of a spreadsheet over these paper-based
ledgers is the ability to update calculations automatically as new data is added to the worksheet.

Components of an Excel spreadsheet

• Worksheets
Worksheets can be used to store, manipulate, calculate, analyse data, and create tables and
charts.
• Workbooks
These are a collection of sheets stored in the same file on the disk. By keeping related
worksheets in the same workbook, it is easy to make simultaneous changes and edits to all
workbook sheets at one time, or to consolidate related sheets or to do calculations involving
multiple worksheets. The number of worksheets is constrained by the amount of available
computer memory (default is 3 sheets).
• A row
A Row is a line of Horizontal cells within a spreadsheet e.g. A3, B3,C3, D3, E3 etc...
Within each worksheet there are 1,048,576 rows.
• A column
A Column is a line of Vertical cells within a spreadsheet e.g. A1,A2, A3, A4, A5 etc...
Within each worksheet there are 16,384 columns.

5
• A cell
A cell is the intersection of a Row and a Column, which has a unique address or reference.
For example, where Column C and Row 8 intersect is cell C8. You use cell references when
you write formulas or refer to cells.
• Absolute cells
A reference such as $A$2 tells Excel how to find a cell based on the exact location of that cell
in the worksheet. An absolute reference is designated by adding a dollar sign ($) before the
column letter and the row number.
• A range
A selection of multiple cells is referred to as a range. A single cell in some circumstances may
represent a range.
• Charts
Excel can create charts quickly to visually represent a data set stored in a worksheet. A range
of chart types can be created, including pie charts, bar charts, line graphs, and scatter plots.
• Macros
Excel can be used to develop and store macros that can be used to undertake frequently
applied tasks. A macro records your mouse clicks and keystrokes while you work and play
them back later. It is used to record the sequence of actions you use to perform a certain
task. When you run the macro, it plays those actions back in the exact same order.
• Presentations
Excel as a range of drawing and formatting tools that can be used to create high-quality
presentations. These presentations can then be printed or copied to a word processing or
presentation software package.

Loading Excel

Select Start to display the Start menu > Select All Programs > Select Microsoft Office > Select
Microsoft Excel 2010. Excel opens and displays an empty workbook as illustrated in Figure
WExcel 1.2.

Figure WExcel 1.2

In Excel, the normal file type is referred to as a workbook. The first blank workbook
displayed by Excel is called Book1 (see Figure WExcel 1.2). Each workbook contains sheets
that are referred to as worksheets if they contain a spreadsheet. A new workbook usually

6
 has three worksheets, but more can be added if required. The screen display is made up of
the worksheet which is divided into rows (with headings 1, 2, 3, ……) and columns (with
headings A, B, C, …..). Although you cannot see them there are 16,384 columns and
1,048,576 rows. This means that there are more than 16 million individual cells in one
worksheet. At the top of the Excel workspace is the title bar displaying Microsoft Excel
followed by the name of the current workbook (Book 1 in this case). Below that is the menu
bar and toolbars. Then, just above the row of column headings, are the Name box containing
the address of the active cell (A1 at the moment) and the Formula Bar displaying the
contents of the active cell (blank at the moment).

Task panes

Task panes are user interface panels that are typically docked to one side of a window in a
Microsoft Office application. Custom task panes give you a way to create your own task pane
and provide users with a familiar interface to access your solution's features. For example,
the interface can contain controls that run code to modify documents or display data from a
data source. Excel does not have any task panes that are special it, just the ones that all
Office programs have.

• Add text to clipboard - the Office clipboard keeps track of up to 24 items that you copied
or cut in any Office program. The total file size that the Clipboard can store is 8 MB. How
to open: Home > Clipboard tab group > dialog box launcher (default location: left side).
Figure WExcel 1.3 illustrates the clipboard menu on Excel 2016.

Figure WExcel 1.3

• Insert clip art - opens a search form to look for clip art images, and then shows
thumbnails of the results. Not all image formats will show thumbnails. How to open:
Insert > Illustrations tab group > Clip art button (default location: right side).
• Selection & Visibility - clicking the name in the list selects the object, which can be clip
art, a picture, word art, or a shape, including a text box. The selection & visibility pane
enables you to select objects to move or modify, to hide objects, and to change the

7
 stacking order for objects. How to open: drawing tools: format or picture tools: format>
arrange tab group > selection pane button (default location: right side).
• Research - the research pane includes a drop list of several sources to search, including a
dictionary, thesaurus, and online sites. You can add other services to this list. How to
open: Review > proofing tab group > Research or Thesaurus buttons and Review >
Translate tab group > Translate button (default location: right side).
• Document recovery - By default, Office automatically saves your work every so often.
When an Office program closes unexpectedly (perhaps from a power outage or a
computer crash), the Document Recovery task pane opens the next time you start that
program. It shows you a list of one to three previously saved versions of the documents
that were open when the program crashed or was shut down incorrectly. Any changes
you made between the AutoSave and the crash are lost. If you had recently saved your
documents, you may not want any of the versions listed at all.

Help

Excel has a comprehensive, easy-to-use help system. The Office Assistant can be accessed by
clicking on the question mark in Figure WExcel 1.4 can be employed to ask for help from the
Help menu (Figure WExcel 1.5):

Figure WExcel 1.4

Figure WExcel 1.5 Excel Help

Saving a workbook

Your workbook can be saved to a local hard disk or stored on an external storage device e.g.
USB memory stick.

1. Click on file and then save.

2. A Save As box will appear - with the file name box highlighted. Type into this box a
file name and save to an appropriate location on the storage drive. It is very
important to save any work created at regular time intervals.

Figure WExcel 1.6 Save As menu

3. Press Delete Key on your keyboard to delete the default file name.
4. Enter the name of your workbook (e.g. TEST). Excel will automatically give it a file
extension ( .xls). The file extension (.XLS) denotes the file to be an Excel spreadsheet.

8
 5. Browse to the location you would like to save the file to and select the appropriate
drive, for example, GLYNDAVIS(F:).

Figure WExcel 1.7 Save to the specified storage device drive

6. Click on SAVE. The name of the document is displayed at the top of the screen.

However, if you wish to make some alteration to the original document and save the altered
version as well as keeping the original version, carry out the following procedures:

1. Click on File and then Save As.

2. The Save As box appears - with the File Name Box highlighted, containing the
documents original name and the cursor flashing.
3. Press Delete Key on keyboard to delete the default file name.
4. Enter the new name of your document.
5. Click on OK. The new name of the document is displayed at the top of the screen. If
you use the Save command the original document will be over written.

Opening an existing workbook

1. Click on File > Open The following screen will appear:

9
 Figure WExcel 1.8 Open file dialog box

2. Select the drive you require.

3. Browse to the file/workbook you wish to open.
5. Click on Open.

Closing a workbook

You can close a workbook at any time. From the File menu, select Close. If you have made
any changes to the workbook since it was last saved, you will be asked whether you wish to
save those changes. Click Yes to keep the changes or No to discard them. You can rename
the file if you wish to keep the changes made but save it to a different Excel file.

Switch to a new worksheet

Click on the tab at the bottom of the screen to select the next sheet.

Figure WExcel 1.9 Excel worksheet tab

It is advisable to use them in sequential order to avoid confusion. Worksheets (sheet 1,

sheet 2, ….. ) can be moved by dragging the worksheet tab to the left or right to reorder the
worksheets.

Creating a new worksheet

To create a new worksheet in your workbook, click on Figure WExcel 1.10 at the bottom of
the worksheet.

Figure WExcel 1.10

Opening a new workbook

10
 Click on File > New > Select Blank workbook.

Figure WExcel 1.11

Printing and print preview

The print preview function allows you to preview your worksheet exactly as it will be
printed. Click on File > Print.

Figure WExcel 1.12 Excel print preview

What to do if you encounter a damaged Excel file?

If an Excel file is corrupted due to a computer crash (or other problem) then Excel will
automatically attempt to save a file. The Document Recovery task pane shows the files that
were open at the time of the computer crash. It identifies the original version of the file and
the recovered version of the file.

11
 After you open the recovered version, you can then save its changes by choosing File > Save
on the Excel menu bar. The AutoRecover feature is set to automatically save changes to your
workbook (provided that the file has already been saved) every ten minutes. You can modify
this time by choosing Tools > Options > Save on the Excel menu bar. The Open and Repair
command can be used to recover corrupt Excel files (choose File > Open and Repair).

Section 2 Entering data and formatting

Data is entered into the worksheet by moving the cursor to the appropriate position on the
screen, clicking the left mouse button to select the cell, and then typing the information
required. The characters you type will then appear in the active cell and on the formula bar.
When you have finished typing data into a cell you should signal the end of that data by
pressing the enter key. There are two basic types of information that can be entered into a
worksheet: constants and formulae. The constants are of four types: numeric values, text
values, date values, and time values. Two special types of constants, called logical values and
error values, are also recognised by Excel but are not discussed in this online workbook.
Numeric values include only the digits 0-9 and some special characters such as:

+ - E e ( ) . , £ % /

A numeric cell entry can maintain precision up to 15 digits. If you enter a number that is too
long, Excel converts it to scientific notation. For example, if you type 97867985685859300, it
will be stored as 97867985685859300, and displayed as 9.7868E+16. Sometimes, although
the number is stored correctly in the cell, the cell is not wide enough to display it properly. In
those cases, Excel will round the number off or display a string of # signs.

To solve this problem, increase the width of the column. A text entry can contain up to
32,767 characters but only 1024 characters will display in the cell, but all will be displayed in
the formula bar.

If the text you enter will not fit in the width of your cell, Excel lets it overlap the adjacent cell
unless that cell already contains an entry, in which case the extra text can be thought of as
being tucked behind the adjacent cell. By default, text is left-justified in a cell whereas
numbers are right-justified.

Entering data in a cell

1. Select a cell in which you want to enter data. See Figure WExcel 2.1.
2. Type in the entry. The entry will appear in the formula bar as it is typed.
3. To enter what you have typed press the Return key or click on the green tick to
enter.

Figure WExcel 2.1

12
Modifying data in a cell

If you are in the process of entering data in a cell and you notice that you have made a
mistake, it is easy to correct it. Press the backspace computer key to delete a character to
the left of the cursor or the delete key to delete a character to the right of the cursor. If you
want to edit the contents of a cell, then you should double-click on the cell and make the
required alterations either in the cell itself or on the formula bar.

If you want to clear the cell of its contents (formula and data), formats, comments, or all
three, you can select that cell with a single click of the right mouse button and select Clear
Contents as illustrated in Figure WExcel 2.2.

Figure WExcel 2.2

Entering data into a range

In Excel, any rectangular area of cells is known as a range. The range is defined by the top-
left and bottom-right corner cell references separated by a colon (:). So, C8:G15 represents
the range of cells cornered by C8 and G15. To enter the same data into a range of cells:

(a) Select the range.

(b) Enter the data.
(c) Hold down the CTRL key and press Return. All of the cells in the range should now
contain the same data, or
• Select the cell containing the data.
• Move the mouse pointer to the bottom right corner of the cell until the pointer
changes to a cross.
(d) Hold down the left mouse button and drag the cross in the direction you wish to fill,
and then release the mouse button.

13
Cancelling a cell entry

To cancel a cell entry before you have pressed

return. Press the Escape key (Esc), or click on the
cross to cancel the entry as illustrated in Figure
WExcel 2.3.

Figure WExcel 2.3

Undoing a cell entry or repeating a cell entry

To undo a cell entry after you have pressed the return key and click on the undo menu
(located at the top left-hand corner of your workbook as illustrated in Figure WExcel 2.4.

Figure WExcel 2.4

You can repeat a cell entry after you have pressed the return key and click on the repeat
menu as illustrated in Figure WExcel 2.5.

Figure WExcel 2.5

Entering numbers

Numbers are constant values containing only the following characters: 1 2 3 4 5 6 7 8 9 0 - +

/ . E e £ $ % , ( ).

Entering dates or times

If you type a date or time (e.g. 13/4/8 or 16:21) directly into a cell Excel should automatically
recognise it as such and changes the cell formatting from general to the appropriate date or
time format. The program will normally align it to the right of the cell and display it in the
formula bar in a standard format (e.g. 13/04/2008 or 16:21:00).

If you type Excel formatting

12/06/8 dd/mm/yy
12-June-8 dd-mmm-yy
31-Oct dd-mmm
Oct 13 2008 Mmm d, yyyy
24/05/08 3:21 dd/mm/yy hh:mm
3:45 PM h:mm AM/PM
3:35:30 PM h:mm:ss AM/PM
13:50 hh:mm
13:50:35 hh:mm:ss
Table WExcel 2.1

The displayed formats in particular cells can be modified using Format > Cells > Number
menu option. You can either choose a date format from the Category box or select Custom
to define your own cell format. Regardless of how the date (or time) is displayed, the actual

14
 value stored in the cell is a long numeric value e.g. the date variable 13/04/2008 would be
stored under general format as 39752.

Entering text

To enter text, select a cell and type the text. A cell can hold up to 256 characters. You can
format the characters within a cell individually but note that if there are more than 255
characters in the cell then the cell will show "#########". This problem can be resolved by
applying text wrapping to the cell.

Formatting a worksheet

You can use many formatting options in Excel to add emphasis to your data or make the
worksheet easier to read. To apply cell formats, you can either use the Toolbar or the Menu
bar. You can change the format of the text by using the following parts of the toolbar:

• To apply or change font size

1. Click on the down arrow to the right of the font size selection box as
illustrated in Figure WExcel 2.6.

Figure WExcel 2.6

2. To select the size you require use the scroll bar arrows to move up or down
the list of available sizes, then click on a number.
3. The selected font size will appear in the font size box.

• To apply or change font type

1. Click on the down arrow to the right of the font box as illustrated in Figure
WExcel 2.7.

Figure WExcel 2.7

2. To select the font, you require use the scroll bar arrows to scroll through the
list of available fonts, then click on a font type.
3. The selected font type will appear in the font box.

• To bold text

1. Click on bold button on the tool bar to enable bold type.

Figure WExcel 2.8

2. Enter text, highlight text, and click on bold button again to return to normal.

15
 Figure WExcel 2.9

• To apply italic text

1. Click on italic button on the tool bar to enable Italic type.

Figure WExcel 2.10

2. Enter text, highlight text, and click on italic button again to return to normal.

Figure WExcel 2.11)

• To apply underlined text

1. Click on underline button on the tool bar to enable Underlined text.

Figure WExcel 2.12

2. Enter text and click on underline button again to return to normal.

Figure WExcel 2.13

• Aligning text

1. Highlight the cell.

2. Click on one of the following alignment boxes in the toolbar, to apply the
desired alignment:

Left alignment
Figure WExcel 1.26
Centred
Figure WExcel 1.27
Right alignment
Figure WExcel 1.28
Centre across columns

Figure WExcel 1.29

Table WExcel 2.2

Column widths and row heights

In a new worksheet all columns and rows are set to a standard size. Rows automatically
adjust to the largest font entered into the row. You may need to adjust the column width if
you are entering more than 8 characters.

16
• Column width

You can format one or a number of columns in the following manner:

1. Highlight the columns you wish to alter.

2. Right click on the computer mouse – this will pull-up the menu illustrated in
Figure WExcel 2.14.

Figure WExcel 2.14

3. Select Column Width from the drop-down menu. An additional menu box
will appear as illustrated in Figure WExcel 2.15.

Figure WExcel 2.15 Column width

5. Enter the column width you require.

6. Click OK.

• Row height

To adjust the Row Height:

1. Select the rows.

2. Right click on the computer mouse – this will pull-up the menu illustrated in
Figure WExcel 2.16.

17
 Figure WExcel 2.16

3. Select Row Height from the drop-down menu. An additional menu box will
appear.

Figure WExcel 2.17 Row height

5. Enter the Row Height you require.

6. Click on OK.

Naming a worksheet

The information on sheet1 might refer to a particular project. It would make sense to name
the sheet (or worksheet) accordingly.

1. Right-click on sheet1.
2. Select Rename from the menu that appears.
3. Type your project name into the text box and press Enter key.

Inserting and deleting rows and columns

Extra rows and columns can be inserted whenever you wish. As an example, insert a row
between row 8 and 9.

1. Click with the right mouse click on the row name 8.

2. Select Insert.

Now, try inserting a column between column B and C

18
 1. Click with the right mouse click on the column name B
2. Select Insert

To delete a row or column, right click on its name and select Delete from the menu which
appears.

The clear command

When you use the Clear command, you will clear the contents, formats or notes but leave
the cells on the worksheet. Unlike delete which removes the cell from the worksheet and
the surrounding cells shift to take their place.

1. Select the range of cells you want to clear.

2. Right click on the cell range you wish to clear as illustrated in Figure WExcel 2.18.
Click on Clear Contents to clear numbers and text.

Figure WExcel 2.18

Spell checking

Excel allows you to check the spelling of your work.

Click on Review tab and select the Spelling button on the toolbar

Figure WExcel 2.19

19
 If a spelling mistake is found Excel will prompt and provide an opportunity to correct the
error.

Section 3 Performing calculations

Excel can be used to develop simple solutions to business data problems. The nature of
these problems can be mathematical, statistical, and financial. This textbook will explore
how you solve statistical problems using Excel.

Entering formulae

Using a formula can help you analyse data on a worksheet. With a formula you can perform
operations, such as addition, multiplication and comparison on worksheet values. Excel
formulas always begin with an equal sign e.g. =7/8, =3*5+4/7, =3*A3, and =A3*A3.

1. Select cell in which you want to enter formula.

2. Type an equal sign (=) to activate the formula bar. If you forget to type an equal sign,
the rest of the line will be treated as text.
3. Enter the formula.
4. Press Enter or Click on the Green Tick to the left of the formula bar.

Understanding operators

Some of the mathematical operators that can be used to create formulae include:

% Percent
^ Exponentiation
* and / Multiplication and division
+ and - Addition and subtraction (or negation when placed before a value
i.e. -1 )
& Text joining
= Equal
> Greater than
< Less than
>= Greater than or equal to
<= Less than or equal to
<> Not equal to
Table WExcel 3.1

It should be noted that the list is listed in order of priority starting with percent (highest
priority) and ending with comparisons (lowest priority) e.g. =. >, …., <>. If you want to alter
the order of priority, use parenthesis (brackets) to group expressions e.g. (i) 9 + 3/2 is equal
to 10.5 and not equal to 6, (ii) (9+3)/2 is equal to 6.

Selecting cells and moving around worksheet

Selecting a cell

To select a cell:

20
 1. Position the cursor over the cell.
2. Click the left mouse button once.

The cell will then become highlighted with a dark border, with the cell reference
number appearing in the upper left portion of the screen.

Selecting a range of cells

If you wish to select more than one cell in a work sheet:

1. Click on the first cell in the range.

2. Holding the left mouse button down, drag the cursor to the last cell in the
range and release the mouse button. The area of the range will be
highlighted.

Select an entire row - Click the cursor in the row heading i.e. the numbers running down the
left-hand side of the worksheet.

Select an entire column - Click the cursor in the column heading i.e. the alphabetic letters on
the top of the worksheet.

Select all the cells within a worksheet - Click on the Select All button. The entire worksheet
will then become highlighted. See Figure WExcel 3.1.

Figure WExcel 3.2

Reference operators

There are three types of reference operators: Range, Union, and Intersection.

Range (Colon :)

Produces one reference to all the cells between and including the two references. See Figure
WExcel 3.3.

21
 Figure WExcel 3.3

Union (Comma ,)

Produces one reference that includes the two references. See Figure WExcel 3.4.

Figure WExcel 3.4

Intersection (Space )

Produces one reference to cells common to the two references. See Figure WExcel 3.5.

Figure WExcel 3.5

Editing a formula

To edit an existing formula:

1. Click on the cell containing the formula. The formula will then appear in the formula
bar as illustrated in Figure WExcel 3.6.

Figure WExcel 3.6

2. Edit the formula in the formula bar.

3. Press the enter key.

Creating and applying names

Names make formulas easier to read, understand, and maintain. You can change or delete
names that have been defined previously and define a constant or computed value that you
intend to use later. Names appear in the reference area of the formula bar when you select
a named cell or an entire named range. In the example below, we will name the monthly
sales data in cells C3:E3 and name this range quarterly_profit.

22
1. Select the range you wish to name e.g. C5:E5

Figure WExcel 3.7 Range example

2. Right click on mouse and choose Define Name (see Figure WExcel 3.8).

Figure WExcel 3.8

3. Enter the name to be applied to the range e.g. quarterly_profit (see Figure WExcel
3.9).

23
 Figure WExcel 3.9

4. Click on OK.

The name may then be used in a formula, instead of using the cell locations and is easier to
interpret and remember, e.g. SUM (quarterly_profit) instead of SUM ( C3:E3) as illustrated in
Figure WExcel 3.10.

Figure WExcel 3.10

Copying formulas to adjacent cells

Rather than retyping a formula in each of the adjacent cells it is much more convenient to
copy the formulas across.

1. Click inside the cell that contains the formula you wish to copy

Figure WExcel 3.11

2. Position the mouse cursor at the bottom left hand corner of the cell. The mouse
cursor will then change to a cross.
3. Hold the left-hand button on the mouse down and drag to where you want the
formula to be copied to. For example, the formula in Figure WExcel 3.12 has been
dragged two cells to the right.

24
 Figure WExcel 3.12

Using absolute and relative references

The $ sign in a cell will tell Excel how to treat your references when copying the content of a
cell. To illustrate this concept, consider what happens to the following formulas in Cell C14
that are copied to D15:

• =C14 becomes =D15

• =$C14 becomes =$C15
• =C$14 becomes =D$14
• =$C$14 becomes =$C$14

This simple example illustrates the $ sign acts as an ‘anchor’ to fix the row number or
column letter. You will find when creating a spreadsheet solution (or model) that a term in
the equation can be constant. To illustrate this concept consider a example where you
would like to calculate price (p) based upon demand for a product (d) where the relationship
between price and demand is given by the equation p = 2d. We can see that no matter what
the value of p, or d, the number 2 does not change. The number 2 is fixed (or constant) and
in a spreadsheet this value would be fixed using the $ sign.

Example WExcel 3.1

Consider solving this problem for price when the demand undergoes a unit change from 1 –
4. We can see from the equation in cell B2 that price=2*A2. When we copy the formula
down then the price is calculated for a demand change from 1, 2, 3, and 4.

Figure WExcel 3.13

Example WExcel 3.2

This same problem can be solved by fixing the value of the number 2 in the spreadsheet (cell
C3). In this case the price in cell C7 is given by the formula price = C3*B7. When we copy the
formula down from C7 to C10 the price value is calculated for the demand change. We note
from the spreadsheet solution that the price in cell C8 is zero and not the correct value of 4.

25
 Inspecting the equation in cell C8 we note that the formula is price = C4*B8. The B8
reference is correct but C4 is incorrect and should read C3, which represents the position of
the number 2.

Figure WExcel 3.14.

Example WExcel 3.3

To solve this problem, we fix the cell position of the number 2 and we achieve this using the
Excel $ sign. Therefore, in cell C7 we insert the correct price equation = $C$3*B7. The use of
$C$3 is to fix the value of the number 2. If we now copy the formula down from C7 to C10
we can now see that we have the correct values for price based upon changing demand

Figure WExcel 3.15

IF function

The IF function is very useful in solving numerical problems and enables the user to ask
questions of the type ‘Is this true or false’ and then undertake a particular action. The
technique can be illustrated by exploring the marks for two examination tests in which the
tutor would like to find out which students obtained a higher mark for test 1 compared to
test 2 (Table WExcel 3.1).

Student Test 1 Test 2

A 46 56
B 67 65
C 34 67
D 78 66
Table WExcel 3.1

26
 This problem can be solved by using the IF function.

Excel solution
=IF(condition, value_if_true, value_if_false)

To solve this problem, we insert the data into Excel (Figure WExcel 1.50). Test 1 (C4:C7) and
Test 2 (D4:D7). In cell E4, insert =IF(C4 > D4, “Larger”, “Smaller”). This will place the text
‘Smaller’ in cell E4 (46 < 56).

Figure WExcel 3.16

Now complete for the other three students by copying the formula down from cell E4 to E7.

Interpretation
Two students (B and D) obtained higher marks for test 1 compared to test 2.

Adding a column of numbers using AutoSum

To add the demand values together from the previous example we can make use of the
Excel AutoSum function.

1. Click in D9.

Figure WExcel 3.17

2. Click on the AutoSum button on the toolbar as illustrtaed in Figure WExcel 3.18
(Formulas > Autosum).

27
 Figure WExcel 3.18

3. Say we choose the Sum option - the AutoSum ( ) suggests a range that is
to be summed, in this case D4:D8.

Figure WExcel 3.19

4. Modify the range from D4:D8 to D4:D7

5. Press the Enter key.

Figure WExcel 3.20 illustrates the final solution in cell D9.

Figure WExcel 3.20

You can achieve this by using the Excel function SUM () e.g. total demand = SUM (B7:B10).
The use of Excel functions will be explored briefly in the next section and in detail
throughout the textbook and online workbooks.

What if analysis

28
 What-if analysis in Microsoft Excel can be used to check what happens if you modify a value
in a formula. For example, what-if analysis can be used to modify a student module mark
given a recent change to the mark after external examiner comments, or, what would
happen to the profit/loss account if we modified a variable cost.

Example WExcel 3.4

To illustrate this concept, consider the situation where a student would like to achieve an A
grade in an economics module. The student requires a minimum overall mark of 70% with
the module assessments consisting of three parts with individual weights: in course
assignment 1 (weight 25%), in course assignment 2 (weight 25%), and end examination
(weight 50%). The student has received the assignment marks and was awarded 66% and
72% respectively. What mark will the student need to obtain from the examination to
achieve an A grade? To solve this problem the student set up a simple Excel worksheet with
the two assignment marks included and the overall mark calculated from the stated formula
(value in cell E6 and formula in cell F6).

Figure WExcel 3.21 Grade calculation

Click in cell D6 and enter a series of examination mark values, one at a time:

• Examination mark 90%. The effect of this change will be to ripple through the
worksheet formulae. In this case, the overall mark is now 79.5%. In this case the
student would achieve an A grade (>70%) but the student would have to obtain
more marks in the examination (90%) than is required to achieve an A grade (70% +).
• Examination mark 70%. This would achieve an overall mark of 69.5%, or 70%, if the
examination board rules allow for rounding up to 70%. If we are in doubt, we could
modify the examination mark to 71%.
• Examination mark 71%. This would achieve the required overall mark of 70% and the
student would achieve an A grade.

Insert function

Excel provides the user with a range of built in functions which will allow a range of
statistical techniques to be applied to a data set. A range of functions will be employed in
later chapters but for the time being we will be content with being able to call the function,
Select Formula > Select Function.

Figure WExcel 3.22

To access the Insert Function menu as illustrated in Figure WExcel 3.23.

29
 Figure WExcel 3.23

A list of the Microsoft Excel functions can be found at the end of this document or go to the
Microsoft Excel support web site at

Section 4 Statistics with Excel

Excel has many built-in functions, from simple mathematical calculations like average and sum,
statistics functions like average and standard deviation, to complex financial and engineering
functions. It is advisable to check the formulae used internally by the functions to ensure that they
will give correct answers for the data used.

Descriptive statistics

Descriptive statistics are those that describe the characteristics of the data. We will be looking at
mean, trimmed mean, standard deviation, median, maximum, minimum, skew and kurtosis.

1. Mean - the mean calculates the average of the data.

2. Trimmed mean - the mean may be distorted by values that are untypical or wrong. A trimmed
mean calculates the average by excluding the most extreme data in pairs. For example, we can
calculate the average with the highest and lowest values removed, or with the two highest and
two lowest values removed. The trimmed mean always removes the data values in pairs.
3. Standard deviation - the standard deviation is a measure of how much the data is dispersed from
the mean. For a normal distribution, 68% of the values should lie within 1 standard deviation
from the mean, 95% of the values will lie within 2 standard deviations from the mean, and 99.7%
of the values would lie within 3 standard deviations from the mean.
4. Median - the median is the middle value in an ordered set of data points, or the average of the
two middle values if there is an even number of data points.
5. Maximum and minimum - the largest and smallest values in a data set.
6. Skew - a measure of how asymmetric the distribution is. If the chart extends further to the left of
the mean than it does to the right, then the distribution of the data has negative skewness. If the

30
 chart extends further to the right of the mean than it does to the left, then the distribution has
positive skewness.
7. Kurtosis - is a measure of how ‘peaked’ a distribution is. The normal distribution has a kurtosis
value of zero and is sometimes referred to as being mesokurtic. A negative number indicates the
data is less peaked than the normal distribution, which is sometimes called a platykurtic. A
positive number indicates the data is more peaked than the normal distribution. The term
leptokurtic is sometimes used in this circumstance. There are different ways of calculating the
kurtosis statistic. If you are comparing your calculations to published values, try to ensure that
the same statistical formula is being used for both data sets.

Using a function

We will introduce specific functions in the other guides but the following example of applying the
AVERAGE function to calculate the mean age in the sample dataset in Figure WExcel 4.1 illustrates
their use:

Figure WExcel 4.1

• Data set in Cells B2:B8 (includes label X in Cell B2)

• Select the cell in which you wish the calculation to be placed (Cell E4)
• Select Formulas > Insert Function > Statistical to open the Function Argument dialogue box
(Figures WExcel 4.2).

Figure WExcel 4.2

Choose Average

31
Figure WExcel 4.3
Click OK

Now select the cells to be included within the calculation (B3:B8)

Figure WExcel 4.4

Click OK

32
 Figure WExcel 4.5

From Excel, the arithmetic mean (or average, or mean) = 6.

Microsoft Excel functions

Table WExcel 1.5 provides a list of all Excel functions that you may find helpful in solving business
statistics type problems. The Excel function includes a link to the Microsoft support web site for that
Excel function.

Excel Function & link to Description

Microsoft Help
1 AVEDEV Returns the average of the absolute deviations of data
points from their mean
2 AVERAGE Returns the average of its arguments

3 AVERAGEA Returns the average of its arguments, including numbers,

text, and logical values
4 AVERAGEIF Returns the average (arithmetic mean) of all the cells in a
range that meet a given criteria
5 AVERAGEIFS Returns the average (arithmetic mean) of all cells that
meet multiple criteria.
6 BASE Converts a number into a text representation with the
given radix (base)
7 BINOM.DIST Returns the individual term binomial distribution
probability
8 BINOM.DIST.RANGE Returns the probability of a trial result using a binomial
distribution
9 BINOM.INV Returns the smallest value for which the cumulative
binomial distribution is less than or equal to a criterion
value
10 BINOMDIST Returns the individual term binomial distribution
probability
11 CHIDIST Returns the one-tailed probability of the chi-squared
distribution
12 CHIINV Returns the inverse of the one-tailed probability of the chi-
squared distribution

33
13 CHISQ.DIST Returns the cumulative beta probability density function

14 CHISQ.DIST.RT Returns the one-tailed probability of the chi-squared

distribution
15 CHISQ.INV Returns the inverse of the left-tailed probability of the chi-
squared distribution.
16 CHISQ.INV.RT Returns the inverse of the one-tailed probability of the chi-
squared distribution
17 CHISQ.TEST Returns the test for independence

18 CHITEST Returns the test for independence

19 COMBIN Returns the number of combinations for a given number of

objects
20 COMBINA Returns the number of combinations with repetitions for a
given number of items
21 CONFIDENCE Returns the confidence interval for a population mean

22 CONFIDENCE.NORM Returns the confidence interval for a population mean

23 CONFIDENCE.T Returns the confidence interval for a population mean,

using a Student's t distribution
24 CORREL Returns the correlation coefficient between two data sets

25 COUNT Counts how many numbers are in the list of arguments

26 COUNTA Counts how many values are in the list of arguments

27 COUNTBLANK Counts the number of blank cells within a range

28 COUNTIF Counts the number of cells within a range that meet the
given criteria
29 COUNTIFS Counts the number of cells within a range that meet
multiple criteria
30 COVAR Returns covariance, the average of the products of paired
deviations
31 COVARIANCE.P Returns covariance, the average of the products of paired
deviations
32 COVARIANCE.S Returns the sample covariance, the average of the
products deviations for each data point pair in two data
sets
33 CRITBINOM Returns the smallest value for which the cumulative
binomial distribution is less than or equal to a criterion
value

34
34 DEVSQ Returns the sum of squares of deviations

35 EXP Returns ‘e’ raised to the power of a given number

36 EXPON.DIST Returns the exponential distribution

37 EXPONDIST Returns the exponential distribution

38 F.DIST Returns the F probability distribution

39 F.DIST.RT Returns the (right-tailed) F probability distribution for two

data sets.
40 F.INV Returns the inverse of the F probability distribution

41 F.INV.RT Returns the inverse of the (right-tailed) F probability

distribution.
42 F.TEST Returns the result of an F-test

43 FACT Returns the factorial of a number

44 FACTDOUBLE Returns the double factorial of a number

45 FDIST Returns the F probability distribution

46 FINV Returns the inverse of the F probability distribution

47 FORECAST Returns a value along a linear trend

48 FORECAST.ETS Uses an exponential smoothing algorithm to predict a

future value on a timeline, based on a series of existing
values
49 FORECAST.ETS. Returns a confidence interval for a forecast value at a
CONFINT specified target date.
50 FORECAST.ETS. Returns the length of the repetitive pattern Excel detects
SEASONALITY for a specified time series.
51 FORECAST.ETS.STAT Returns a statistical value relating to a time series
forecasting.
52 FORECAST.LINEAR Predicts a future point on a linear trend line fitted to a
supplied set of x- and y- values.
53 FREQUENCY Returns a frequency distribution as a vertical array

54 FTEST Returns the result of an F-test

55 GEOMEAN Returns the geometric mean

35
56 HARMEAN Returns the harmonic mean

57 HYPGEOM.DIST Returns the hypergeometric distribution

58 HYPGEOMDIST Returns the hypergeometric distribution

59 IF Specifies a logical test to perform

60 IFS Tests a number of supplied conditions and returns a result

corresponding to the first condition that evaluates to
TRUE.
61 INT Rounds a number down to the nearest integer

62 INTERCEPT Returns the intercept of the linear regression line

63 KURT Returns the kurtosis of a data set

64 LARGE Returns the k-th largest value in a data set

65 LINEST Returns the parameters of a linear trend

66 MAX Returns the largest value from a list of supplied numbers

67 MAXIFS Returns the largest value from a subset of values in a list

that are specified according to one or more criteria.
68 MIN Returns the smallest value from a list of supplied numbers

69 MINIFS Returns the smallest value from a subset of values in a list

that are specified according to one or more criteria.
70 MEDIAN Returns the median of the given numbers

71 MODE Returns the most common value in a data set

72 NEGBINOM.DIST Returns the negative binomial distribution

73 NEGBINOMDIST Returns the negative binomial distribution

74 NORM.DIST Returns the normal cumulative distribution

75 NORM.INV Returns the inverse of the normal cumulative distribution

76 NORM.S.DIST Returns the standard normal cumulative distribution

77 NORM.S.INV Returns the inverse of the standard normal cumulative

distribution.

36
78 NORMDIST Returns the normal cumulative distribution

79 NORMINV Returns the inverse of the normal cumulative distribution

80 NORMSDIST Returns the standard normal cumulative distribution

81 NORMSINV Returns the inverse of the standard normal cumulative

distribution
82 PEARSON Returns the Pearson product moment correlation
coefficient
83 PERCENTILE Returns the k-th percentile of values in a range

84 PERCENTILE.EXC Returns the k-th percentile of values in a range, where k is

in the range 0 to 1, exclusive
85 PERCENTILE.INC Returns the k-th percentile of values in a range, where k is
in the range 0 to 1, inclusive.
86 PERCENTRANK Returns the percentage rank of a value in a data set

87 PERCENTRANK.EXC Returns the rank of a value in a data set as a percentage

(0..1, exclusive) of the data set
88 PERCENTRANK.INC Returns the percentage rank of a value in a data set

89 PERMUT Returns the number of permutations for a given number of

objects
90 PERMUTATIONA Returns the number of permutations for a given number of
objects (with repetitions) that can be selected from the
total objects
91 PI Returns the value of pi

92 POISSON Returns the Poisson distribution

93 POISSON.DIST Returns the Poisson distribution

94 POWER Returns the result of a number raised to a power

95 QUARTILE Returns the quartile of a data set

96 QUARTILE.EXC Returns the quartile of the data set, based on percentile

values from 0..1, exclusive
97 QUARTILE.INC Returns the quartile of a data set

98 RAND Returns a random number between 0 and 1

99 RANDBETWEEN Returns a random number between the numbers you

specify

37
100 RANK Returns the rank of a number in a list of numbers

101 RANK.AVG Returns the rank of a number in a list of numbers

102 RANK.EQ Returns the rank of a number in a list of numbers

103 ROUND Rounds a number to a specified number of digits

104 ROUNDDOWN Rounds a number down, toward zero

105 ROUNDUP Rounds a number up, away from zero

106 RSQ Returns the square of the Pearson product moment

correlation coefficient
107 SKEW Returns the skewness of a distribution

108 SKEW.P Returns the skewness of a distribution based on a

population: a characterization of the degree of asymmetry
of a distribution around its mean
109 SLOPE Returns the slope of the linear regression line

110 SMALL Returns the k-th smallest value in a data set

111 SQRT Returns a positive square root

112 STANDARDIZE Returns a normalized value

113 STDEV Estimates standard deviation based on a sample

114 STDEV.P Calculates standard deviation based on the entire

population
115 STDEV.S Estimates standard deviation based on a sample

116 STDEVA Estimates standard deviation based on a sample, including

numbers, text, and logical values
117 STDEVP Calculates standard deviation based on the entire
population
118 STDEVPA Calculates standard deviation based on the entire
population, including numbers, text, and logical values
119 STEYX Returns the standard error of the predicted y-value for
each x in the regression
120 SUM Adds its arguments

121 SUMIF Adds the cells specified by a given criteria

38
122 SUMIFS Adds the cells in a range that meet multiple criteria

123 SUMPRODUCT Returns the sum of the products of corresponding array

components
124 SUMSQ Returns the sum of the squares of the arguments

125 SUMX2MY2 Returns the sum of the difference of squares of

corresponding values in two arrays
126 SUMX2PY2 Returns the sum of the sum of squares of corresponding
values in two arrays
127 SUMXMY2 Returns the sum of squares of differences of
corresponding values in two arrays
128 T Converts its arguments to text

129 T.DIST Returns the Student's left-tailed t-distribution.

130 T.DIST.2T Returns the cumulative, two-tailed Student's t-distribution.

131 T.DIST.RT Returns the cumulative, right-tailed Student's t-

distribution.
132 T.INV Returns the t-value of the Student's t-distribution as a
function of the probability and the degrees of freedom
133 T.INV.2T Returns the two-tailed inverse of the Student's t-
distribution.
134 T.TEST Returns the probability associated with a Student's t-test

135 TDIST Returns the Student's t-distribution

136 TINV Returns the inverse of the Student's t-distribution

137 TREND Returns values along a linear trend

138 TRUNC Truncates a number to an integer

139 TTEST Returns the probability associated with a Student's t-test

140 VAR Estimates variance based on a sample

141 VAR.P Calculates variance based on the entire population

142 VAR.S Estimates variance based on a sample

143 VARA Estimates variance based on a sample, including numbers,

text, and logical values

39
144 VARP Calculates variance based on the entire population

145 Z.TEST Returns the one-tailed probability-value of a z-test

146 ZTEST Returns the one-tailed probability-value of a z-test

Table WExcel 4.1

Excel Data Analysis add-in

The standard capabilities of Excel can be extended by using add-ins. Some of the add-ins are
produced by Microsoft, but there are also many other add-ins produced by other companies.

To activate or deactivate add-ins:

Run Excel and have an Excel file open.

Select File > Options

Figure WExcel 4.1

Select Excel Add-ins from the Manage box and click Go. This will access the Add-ins menu for
Analysis ToolPak as illustrated in Figure WExcel 4.2.

40
 Figure WExcel 4.2

Select:

• Analysis ToolPak
• Solver Add-in

Click OK.

An extra command will now be available in Excel called Data Analysis that is accessible via Data >
Data Analysis.

Figure WExcel 4.3

This will allow a series of analyses to be performed on data sets.

Figure WExcel 4.4

Table WExcel 4.1 shows some of the functions available in the Data Analysis ToolPak

41
 Function name Description
Anova: Single Factor Performs a one-way analysis of variance (ANOVA)
Correlation Creates a correlation matrix showing the Pearson correlation coefficient
(r) for each pair of variables of N cases selected
Descriptive statistics Calculates a range of univariate descriptive statistics, including
measures of central tendency, dispersion, skewness and kurtosis for a
variable
Histogram Generates a histogram for a range of data (this function also generates
a table of the data on which the histogram is based and can be used for
Pareto analysis)
t-Test: Paired Two- Performs a t-test to compare the means of a paired sample
Sample for Means
t-Test: Two-Sample Performs a t-test to compare the means of two independent samples,
Assuming Equal assuming equal variances
Variances
t-Test: Paired Two- Performs a t-test to compare the means of two independent samples,
Sample Assuming assuming unequal variances
Unequal Variances
Table WExcel 4.2

Example: Descriptive Statistics

For example, let us calculate the descriptive statistics for the last example.

Figure WExcel 4.5

• Data set in Cells B2:B8 (includes label X in Cell B2)

• Select the cell in which you wish the calculations to be placed (say Cell D2)
• Select Data > Data Analysis

Figure WExcel 4.6

42
Select Descriptive Statistics
Click OK

Click on in Input Range and select cell range B3:B8.

Grouped by Columns
In Output Range select cell D2.

Click on Summary statistics check box

Figure WExcel 4.7

Click OK

Figure WExcel 4.8

43
From the Excel solution illustrated in Figure WExcel 4.8, a range of summary statistics are provided,
including the mean value of 6. This agrees with the previous method.

Example Two Sample Independent t test (equal variances)

A marketing research firm requires to test how effective a new version of a popular bottled water is
using a sample of 20 people, half of whom taste the old water and half who taste the new water.
The people in the study are then given a questionnaire which evaluates how enjoyable the water
was. Determine whether there is a significant difference between the perception of the new and old
water.

Figure WExcel 4.8

Based upon further information, the analysts decide to conduct a two independent sample t-test
assuming unequal variances.

H0: no difference in population rating

1 = 2

H1: difference in population rating

1 ≠ 2

Two tail test

Undertake test

Select Data > Data Analysis

Choose:

t-test: Two-Sample Assuming Unequal Variances

44
Figure WExcel 4.9

Click OK

Input:

Variable 1 Range: B3:B12

Variable 2 Range: C3:C12
Hypothesized Mean Difference: 0
Output Range: E2

Figure WExcel 4.10

Click OK

Figure WExcel 4.11

45
From Figure WExcel 4.12

Mean 1 = 15.2
Variance 1 = 9.51
Mean 2 = 11.7
Variance 2 = 12.46

Observe Mean 1 > Mean 2 but is this statistically significant.

To answer this question, look at the t-test results.

Number of observations n = 10
Degrees of freedom df = 9

t-test statistic = 2.36

Given we have a 2-tail test then

P(T <= t) two-tail = 0.02967 …

T Critical two-tail = 2.1009 …

Decision

Observe

• Test statistic t = 2.36 > critical t value = 2.1

• Test p-value = 0.02967 < 0.05

Both cases will give you the same conclusion.

Accept the alternative hypothesis, H1.

The sample data collected suggests that the new bottled water is more highly rated compared to the
old bottled water. Remember this will be based upon the model assumptions (random sampling,
independent variables, population normally distributed, etc).

Summary
This workbook provided the reader with an introduction to the Microsoft Excel spreadsheet that will
be required to tackle the Excel topics described in the textbook.

Excel - recommended online support

1. Microsoft Excel help center https://support.office.com/en-gb/excel
2. Excel Functions http://www.excelfunctions.net/
3. ExcelUser http://www.exceluser.com/

46