Statistical Functions

What Are Statistical Functions In Excel?

Microsoft Excel is popularly used for several purposes, including conducting mathematical
computations. Functions in Excel are widely used in statistics along with statistical functions.

Statistical functions are primarily used to mathematically process a specified set of cells in a
worksheet. For example, to add values occupying a large group of cells, you need to use the
SUM function.

Functions are more extensively used than formulas when a mathematical process is applied to
a group of cells. Using formulas to add values, the location of every cell must be added one at
a time to the formula. It is time-consuming, especially when the values of multiple cell
locations need to be added. This is where statistical functions come to play.

The main purpose of a statistical function is to execute statistical, logical, and mathematical
operations using specific values in a particular order. Numerous statistical functions,
principles, and algorithms are used for analyzing raw data, constructing statistical models,
and much more.

Some very useful statistical functions in Excel:-

Average
The average is defined as the mean value which is equal to the ratio of the sum of the number
of a given set of values to the total number of values present in the set.
Formula:- Average = Sum of Values/ Number of values
To calculate the average of a group of numbers, use the AVERAGE function.
Averageif
To average cells based on one criteria, use the AVERAGEIF function. For example, to calculate
the average excluding zeros.

Median
Generally median represents the mid-value of the given set of data when arranged in a
particular order.

Median: Given that the data collection is arranged in ascending or descending order.
The median for grouped data can be calculated using the formula,

To find the median (or middle number), use the MEDIAN function.

Mode
The most frequent number occurring in the data set is known as the mode. We can calculate
the mode for grouped data using the below formula:
To find the most frequently occurring number, use the MODE function.

Standard Deviation
The standard deviation is based on the entire population using the STDEV.P function in Excel
and how to estimate the standard deviation based on a sample using the STDEV.S function in
Excel.
What is Standard Deviation?
A standard deviation is a number that tells you how far numbers are from their mean.

1. For example, the numbers below have a mean (average) of 10.

Explanation: the numbers are all the same which means there's no variation. As a result, the
numbers have a standard deviation of zero. The STDEV function is an old function. Microsoft
Excel recommends using the new STEDV.S function which produces the exact same result.

2. The numbers below also have a mean (average) of 10.

Explanation: the numbers are close to the mean. As a result, the numbers have a low
standard deviation.

3. The numbers below also have a mean (average) of 10.

Explanation: the numbers are spread out. As a result, the numbers have a high standard
deviation.

STDEV.P
The STDEV.P function (the P stands for Population) in Excel calculates the standard deviation
based on the entire population. For example, you're teaching a group of 5 students. You have
the test scores of all students. The entire population consists of 5 data points. The STDEV.P
function uses the following formula:
STDEV.S
The STDEV.S function (the S stands for Sample) in Excel estimates the standard deviation
based on a sample. For example, you're teaching a large group of students. You only have the
test scores of 5 students. The sample size equals 5. The STDEV.S function uses the following
formula:

Note: why do we divide by n - 1 instead of by n when we estimate the standard deviation

based on a sample? Bessel's correction states that dividing by n-1 instead of by n gives a
better estimation of the standard deviation.

Min
To find the minimum value, use the MIN function.

Max
To find the maximum value, use the MAX function.

Large
To find the third largest number, use the following LARGE function.

Check:

Small
To find the second smallest number, use the following SMALL function.
Check:

Math Functions
The Excel Math Functions perform many of the common mathematical calculations, including
basic arithmetic, conditional sums & products, exponents & logarithms, and trigonometric
ratios.

SUM
Function Description
The Excel SUM function adds together a supplied set of numbers and returns the sum of
these values.

The syntax of the function is:

SUM( number1, [number2], ... )

Excel Sum Function Examples
The following spreadsheet shows three simple examples of the Excel Sum function:
The above examples show that each argument to the Sum function can be supplied as a
single value or cell reference, or as an array of values or cells.

Sumif
To sum cells based on one criteria (for example, greater than 9), use the following SUMIF
function (two arguments).

To sum cells based on one criteria (for example, green), use the following SUMIF function
(three arguments, the last argument is the range to sum).

Sumifs
To sum cells based on multiple criteria (for example, circle and red), use the following
SUMIFS function (first argument is the range to sum).
General note: in a similar way, you can use the AVERAGEIF function to average cells based
on one criteria and the AVERAGEIFS function to average cells based on multiple criteria.

Count
To count the number of cells that contain numbers, use the COUNT function.

Countif
To count cells based on one criteria (for example, greater than 9), use the following COUNTIF
function.
Countifs
To count rows based on multiple criteria (for example, green and greater than 9), use the
following COUNTIFS function.

SQRT
Function Description
The Excel Sqrt function calculates the positive square root of a supplied number.

The syntax of the function is:

SQRT( number )

Excel Sqrt Function Examples

The following spreadsheet shows three simple examples of the Excel Sqrt function.
CEILING
Function Description
The Excel Ceiling function rounds a supplied number away from zero, to the nearest multiple
of a given number.

The syntax of the function is:

CEILING( number, significance )

Ceiling Function Examples

In column B of the following spreadsheet, the Excel Ceiling function is used to round the
positive and negative numbers 22.25 and -22.25 to different significance values.

FLOOR
Function Description
The Excel FLOOR function rounds a supplied number towards zero to the nearest multiple of
a specified significance.

The syntax of the function is:

FLOOR( number, significance )

Floor Function Examples

In column B of the following spreadsheet, the Excel Floor function is used to round the
positive and negative numbers 26.75 and -26.75 to different multiples of significance.

INT
Function Description
The Excel Int function truncates a supplied number down to the closest integer.

The syntax of the function is:

INT( number )

Excel Int Function Examples

The following spreadsheets show the Excel Int function applied to different numbers:
ROUND
Function Description
The Excel Round function rounds a supplied number up or down, to a specified number of
decimal places.

The syntax of the function is:

ROUND( number, num_digits )

Excel Round Function Examples

Column B of the following spreadsheet shows several examples of the Excel Round function:

Rand
Function Description
The Excel Rand function generates a random real number between 0 and 1.

The function takes no arguments and therefore, its syntax is:

RAND( )
Although the number generated is between 0 and 1, you can use the function to generate a
random real number between any two supplied limits a and b, using the formula:
=a + (b-a) * RAND( )

Examples of this are provided below.

In the following spreadsheet, the Excel Rand function is used to generate random numbers
between different limits.

Financial Functions

To illustrate Excel's most popular financial functions, we consider a loan with monthly
payments, an annual interest rate of 6%, a 20-year duration, a present value of $150,000
(amount borrowed) and a future value of 0 (that's what you hope to achieve when you pay off
a loan).
We make monthly payments, so we use 6%/12 = 0.5% for Rate and 20*12 = 240 for Nper
(total number of periods). If we make annual payments on the same loan, we use 6% for Rate
and 20 for Nper.

PMT
The Excel PMT function is a financial function that returns the periodic payment for a loan.
You can use the PMT function to figure out payments for a loan, given the loan amount,
number of periods, and interest rate.

Select cell A2 and insert the PMT function.

Note: the last two arguments are optional. For loans, Fv can be omitted (the future value of a
loan equals 0, however, it's included here for clarification). If Type is omitted, it is assumed
that payments are due at the end of the period.

Result. The monthly payment equals $1,074.65.

Tip: when working with financial functions in Excel, always ask yourself the question, am I
making a payment (negative) or am I receiving money (positive)? We pay off a loan of
$150,000 (positive, we received that amount) and we make monthly payments of $1,074.65
(negative, we pay).

RATE
The Excel RATE function is a financial function that returns the interest rate per period of an
annuity. You can use RATE to calculate the periodic interest rate, then multiply as required to
derive the annual interest rate. The RATE function calculates by iteration.

If Rate is the only unknown variable, we can use the RATE function to calculate the interest
rate.
NPER
The Excel NPER function is a financial function that returns the number of periods for a loan or
investment. You can use the NPER function to get the number of payment periods for a loan,
given the amount, the interest rate, and periodic payment amount.

Or the NPER function. If we make monthly payments of $1,074.65 on a 20-year loan, with an
annual interest rate of 6%, it takes 240 months to pay off this loan.

We already knew this, but we can change the monthly payment now to see how this affects
the total number of periods.

Conclusion: if we make monthly payments of $2,074.65, it takes less than 90 months to pay
off this loan.

PV
The Excel PV function is a financial function that returns the present value of an investment.
You can use the PV function to get the value in today's dollars of a series of future payments,
assuming periodic, constant payments and a constant interest rate.
Or the PV (Present Value) function. If we make monthly payments of $1,074.65 on a 20-year
loan, with an annual interest rate of 6%, how much can we borrow? You already know the
answer.
FV
The Excel FV function is a financial function that returns the future value of an investment.
You can use the FV function to get the future value of an investment assuming periodic,
constant payments with a constant interest rate.

And we finish this chapter with the FV (Future Value) function. If we make monthly payments
of $1,074.65 on a 20-year loan, with an annual interest rate of 6%, do we pay off this loan?
Yes.

But, if we make monthly payments of only $1,000.00, we still have debt after 20 years.

“All our dreams can come true, if we have the courage to pursue them.”
—Walt Disney