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January 2022

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Microsoft Excel Essentials I
Inés Alegre

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Alejandro Serrano
Clara Alonso

This technical note presents some useful functions of Microsoft (MS) Excel© that all managers

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should be familiar with. MS Excel is the tool of choice for most types of business computations
as it is very powerful, yet simple enough to be used easily. Having a basic knowledge on how to
perform calculations or draw graphs in a MS Excel spreadsheet is a useful skill that can be applied
in many business situations.
MS Excel has hundreds of formulas and options. In this particular note we will introduce only a
selection of them, focusing on the functions that are more commonly used in the MBA courses.
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The steps to follow may change slightly depending on the MS Excel version you are using (e.g.,
Windows, Mac).

Built-in Functions
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MS Excel has a large library of built-in functions you can use to perform standard worksheet
calculations. For example, given the three following numbers located in cells A1, A2 and A3
(see Figure 1),
Figure 1
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to perform the sum of the three cells, that is, 4 + 7 + 3, you can write in any empty cell the formula:
= A1 + A2 + A3
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This technical note was prepared by Professors Inés Alegre and Alejandro Serrano, and Clara Alonso, research assistant.
January 2022.
All of the material contained in this document has been developed by the author unless otherwise stated.

Copyright © 2022 IESE. To order copies contact IESE Publishing via www.iesepublishing.com. Alternatively, write to
publishing@iese.edu or call +34 932 536 558.
No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form
or by any means - electronic, mechanical, photocopying, recording, or otherwise - without the permission of IESE.

Last edited: 25/1/22

 ADN-289-E Microsoft Excel Essentials I

Or use the built-in function SUM, indicating the range of cells to be included in the function
(from A1 to A3):
=SUM(A1:A3)

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The range of cells, from A1 to A3, can be directly written as A1:A3 in the formula or simply use

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the computer mouse to select the range.
In both cases the result will be the same, that is, 14 (see Figure 2).
Figure 2

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=function name (parameter values)
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All MS Excel built-in formulas have the same basic syntax:

If you are unfamiliar with the syntax of a particular function, the MS Excel Help explains each of
them in detail.
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Common Built-in Functions
MS Excel skills can only be acquired with some practice. Here we will introduce some of the
functions that are most widely used. We will do so using the following set of numbers as an
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example (see Figure 3).

Figure 3
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PRODUCT
To multiply all numbers in range A1:A9 a handy option is to use the built-in function PRODUCT.
The syntax should be the following:
=PRODUCT(A1:A9)

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This formula would give as a result the multiplication of all the numbers in the specified range,
that is, 62208.

COUNT

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To know how many cells are full in a certain range, the function COUNT is the appropriate one.

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=COUNT(A1:A9)
This expression will give 9 as a result, as there are nine cells which contain numbers in the range
A1:A9.

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IF
This is a very popular function for identifying the cells that fulfill a certain condition. For example,
in the table of Figure 3 you may want to know whether a cell is lower than five. Then write next
to each cell (column B) the following formula:
=IF(A1<5; TRUE; FALSE)

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which writes TRUE if cell A1 fulfills the condition, and FALSE otherwise (see Figure 4).
Figure 4
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SUMIF / COUNTIF
The functions SUMIF and COUNTIF combine the concepts learned just above. SUMIF/COUNTIF
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would sum/count the cells satisfying a certain condition.

For example, if we are interested in adding all numbers that are lower than five, we can simply
write:
=SUMIF(A1:A9; “<5”)
First the range of cells in which we want to apply the formula is specified (cells A1 to A9) and then
the condition to fulfill is written (lower than five). The result in this case is 15 (2 + 3 + 2 + 3 + 4 + 1).
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MIN/MAX
The formulas MIN and MAX respectively identify the minimum and maximum of a certain range
of numbers.
=MIN(A1:A9)
=MAX(A1:A9)

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The first formula would give as a result 1; and the second one yield 9.

AVERAGE
To calculate the mean of a range of numbers the following formula is handy:

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=AVERAGE (A1:A9)

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which in our example would give 4.22 as a result.

STANDARD DEVIATION
The standard deviation is a measure of dispersion of a set of numbers and is calculated through:

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=STDEV (A1:A9)
Using the numbers in our example the result is 2.81.

PERCENTILE

=PERCENTILE(A1:A9;0.2)
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To calculate the percentiles of a set of numbers the formula:

returns the percentile 20% of a not necessarily ordered sample, in our case that would be 2.

MEDIAN
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The median of a sample is the number that leaves half of the sample above and half of the
sample below (that is, percentile 50%). It can be calculated as:
=MEDIAN(A1:A9)
The median of the numbers in our example is 3.
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NPV
To calculate the net present value (NPV) of a collection of cashflows given a discount rate (say 0.2),
the corresponding formula is:
=NPV(0.2;A1:A9)
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This formula would give 17.41 as a result. Please note that NPV discounts all cashflows
introduced. If the first number (A1) corresponds to time zero which should therefore not be
discounted, then the formula should only contain cells A2 to A9, that is:
=NPV(0.2; A2:A9)+A1

Referencing
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Calculations express relationships between values. When using MS Excel, it is a good idea to
avoid using actual numbers in formulas. Instead, use cell references that point to the cells
holding the numbers. By keeping each data item in a unique location in the worksheet, you can
easily change an item if necessary and have the change reflected wherever the item is used
throughout the worksheet.

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Consider the following example, where current tax is 5% (see Figure 5).
Figure 5

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The formula in cell E4 (Total Tax 3.40) could be written in many equivalent ways, namely:
=68*0.05
=D4*0.05
=D4*C1
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Which one is better? Our recommendation is that you always use the third option. This way, if
the content of cells C1 or D4 changes, the result of the formula in E4 will change accordingly.
For example, should the tax change from 5% to 4%, all numbers from E4 to E6 will be
automatically re-calculated to 2.72, 3.20, and 6.04 respectively.
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Copying Formulas: Relative and Absolute Addressing
You may want to use the same formula in one or more places in a worksheet. It is more efficient
to build the formula once and then copy it to the other locations where you need it than create
it from scratch each time. If you copy a formula, you must understand MS Excel’s relative and
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absolute addressing.
Let’s work with a variant of the previous example (see Figure 6):
Figure 6
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The formula written in D4 is =B4+C4. This is used to calculate total sales of Department 1 in
semester 1 and 2. Say you want to use the same formula for calculating the total sales of
Departments 2 and 3. Although we could directly write the formulas, it is easier to copy the
formula from D4 into D5 and D6. To do so in an easy way, select cell D4, click on the lower right-
hand corner of the cell, and drag down through cells D5 and D6 (see Figure 7).

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Figure 7

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For each copied formula, MS Excel automatically adjusts the cell references. So, cells D5 and D6
read now “=B5+C5” and “=B6+C6” respectively.
Figure 8 shows the new values in cells D5 and D6.
Figure 8

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This is MS Excel’s default mode when copying formulas. It is known as relative addressing.
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Sometimes relative addressing is not appropriate. For example, given total tax in cell E4 (see Figure 9)
calculated as:
=D4*C1
Figure 9
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If we select E4 and drag down, as we did before, the formula in E5 would be:
=D5*C2
The first reference in the formula is correct (using D5 as the total for Department 2), but C2 is
not (it is an empty cell); C1 is needed instead.

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For C1 to appear, we should use absolute addressing, which fixes the reference to a cell no matter
where the formula is copied. Absolute addressing can apply to a single cell or a range of cells.
Absolute addressing requires using the dollar sign $ before the row and the column name. For
instance, an absolute reference to the tax value cell is written as $C$1 (in contrast to the relative

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reference, C1).

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It is also possible to fix just the row but not the column by writing C$1 or fix the column but not
the row by writing $C1.
Getting back to our example: If the formula in E4 instead of being

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=D4*C1
is changed into
=D4*$C$1
then the tax cell is fixed and the formula copied in cells E5 and E6 is correct (you can check that
5% of 80 is 4) (see Figure 10).
Figure 10
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Adding/Removing /Selecting Columns (or Rows)

To add/subtract a column just click on the header of the column and right click: A menu will
open where you find the options “Insert/Delete”. Click “Insert” to introduce a new column and
“Delete” to delete it. The same method works for rows.
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Alternatively, you can use a shortcut: Click on the header of the column and then press “CTRL +”
(in a Mac, use “CTRL SHIFT +”) to add a new column or “CTRL –” to remove an existing column.

Change Cell Formats

In MS Excel, you can format cells for things such as currency, percentages, decimals, dates, time,
etc. This is useful for improving readability, but also required when applying certain formulas.
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Establishing a suitable cell format is highly recommended.

To apply a specific cell format, select the cells you want to change, right click, and select “Format
Cells”, where you can choose multiple formats (see Figure 11).

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Figure 11

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Additional Formulas
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Although MS Excel is designed to work with numbers, it can also handle text. We present next a
couple of formulas that can be used with either numbers or text and that are frequently used.

VLOOKUP
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This function allows you to find a data point (number, text, …) in an existing table/range.
For instance, you may want to find the Brazil dial code (see Figure 12).
Figure 12
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The function
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=VLOOKUP(E2;A2:C11;3;FALSE) or alternatively,
=XLOOKUP(E2; A2:A11; C2:C11)
will return “+55”

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How does VLOOKUP work? It takes four arguments: what to look for (E2, or Brazil), where to
look for (the full table A2:C11), which column contains the data point you want to return
(column 3, which contains the prefix), and FALSE (an advanced argument you don’t have to
worry about).

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In some MS Excel version, the alternative XLOOKUP function can be used, which saves you the

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fourth argument:
= XLOOKUP(E2, A2:A11, C2:C11).
In this case, the third argument is more descriptive, as it indicates the whole column, not only
the column number.

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Likewise, if you want to find the abbreviation for Pakistan you can write
=VLOOKUP(E5;A2:C11;2;FALSE), or alternatively,
=XLOOKUP(E5; A2:A11; B2:B11)
For these functions to work, it is critical that the first column of the second argument contains

the table A2:C11).

CONCATENATE
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the value specified in the first argument (that is, Brazil or Pakistan appear in the first column of

Sometimes, you want to write whole sentences in MS Excel combining information from various
cells. The function CONCATENATE() can be used, but using the ampersand sign (&) is usually
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more intuitive.
For instance, given the numbers in Figure 13,
Figure 13
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you may want to generate in a single cell the sentence: “If you reduce 100 by 20%, you obtain 80”.
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To do so, the ampersand function (“&”) can be used as follows (see Figure 14).
="If you reduce "&A1&" by "&A2&"%, you obtain "&(A1-A1*A2/100)
As you see, this function even allows you to include calculations. (If you do so, you may want to
use the function “TRUNC()” to avoid too many digits after the decimal point).
Figure 14
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FILTER/ SORT
Sometimes, you need to focus just on one part of a dataset, and filtering the data is useful for
hiding or showing what you are interested in seeing.

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For instance, given the table in Figure 15:

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Figure 15

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To focus only on the results of July and August, you can use the filter function as follows:
Select the entire table with the mouse. Then go to the Data tab in the upper menu and select
the option Filter. An arrow will appear next to the column name. If you select the column header
arrow you will be able to filter the data.
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In our case, we want to see the data for the months of July and August, so we need to select
those months as shown in Figure 16.
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Figure 16

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When selecting the column header arrow, many options will apear. Text Filters and Number
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Filters will allow you to filter by other characteristics such as, “if the word contains the letter A”
or “if the revenue is greater than 3000”.
Lastly, another option the Filter provides is Sorting. You might want to sort your data by
Revenue. In this case, just choose the arrow on Revenue and click on Sorting (“Smallest to
Largest” or “Largest to Smallest”) (see Figure 17).
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Figure 17
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Alternatively, you can sort your data by using Sort in the upper menu Data tab. You need to
select all the data and press the “Sort” option (if you do not select part of your data, it will remain
static, and might lead to problems). When selecting this option, a new tab will appear, where
you will be able to choose which column you want to sort, what the sorting will rely on, and by

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what condition you will be sorting your data. You can also choose more than one condition to
sort the data with the option “Add Level” in the tab.

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In our example, to sort first by Year (chronologically), then by Revenue (Smallest to Largest), we
will proceed as follows (see Figure 18).
Figure 18

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with the following result (see Figure 19).

Figure 19
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Basic Graphs
Besides calculations, MS Excel offers multiple options for visual representations of data. Sometimes
charts can be more useful than a sheet full of numbers. Here we present some simple charts.

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For instance, given the table in Figure 20.

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Figure 20

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We may want to draw the evolution of each Section over the years. To do that, select all our
data, go to the Insert tab menu at the top, then in the area called Charts, choose the Line symbol
(see Figure 21).
Figure 21
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Once the graph is created, it can be edited. Select in the graph the item you would like to modify
and the “Format Data Series” panel will appear where the desired changes can easily be made
(see Figure 22).

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Figure 22

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Many types of graphs are possible. You will need to choose the most appropriate one depending
on the data you have and what you want to show.
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