Resources Excel Excel for Finance

Excel for Finance

The top 10 Excel functions you need to know

Written by Read Time

Tim Vipond 6 minutes

Over 2 million + professionals use CFI to learn accounting,

financial analysis, modeling and more. Unlock the essentials of
corporate finance with our free resources and get an exclusive
sneak peek at the first module of each course.

Start Free

Guide to Excel for Finance – Functions & Formulas

If you want to learn Excel for finance, then you’ve come to the right
spot. At CFI, we’re on a mission to help you advance your career as a
financial analyst…and being an expert at Excel is a big part of that.

In this guide, we’ve broken down what we believe are the most
important Excel functions for finance professionals. If you work your
way through this list, we’re confident you’ll be well prepared to be a
world-class financial analyst in Excel.

Top 10 Excel Functions for Finance

Here are the top 10 most important functions and formulas you need to
know, plain and simple. Follow this guide and you’ll be ready to tackle
any financial problems in Excel. It should be noted that while each of
these formulas and functions are useful independently, they can also be
used in combinations that make them even more powerful. We will
point out these combinations wherever possible.

#1 XNPV

Formula: =XNPV(discount_rate, cash_flows, dates)

The number one formula in Excel for finance professionals has to be

XNPV. Any valuation analysis aimed at determining what a company is
worth will need to determine the Net Present Value (NPV) of a series of
cash flows.

Unlike the regular NPV function in Excel, XNPV takes into account
specific dates for cash flows and is, therefore, much more useful and
precise.

To learn more, check our free Excel Crash course.

#2 XIRR

Formula: =XIRR(cash flows, dates)

Closely related to XNPV, another important function is XIRR, which
determines the internal rate of return for a series of cash flows, given
specific dates.

XIRR should always be used over the regular IRR formula, as the time
periods between cash flows are very unlikely to all be exactly the same.

To learn more, see our guide comparing XIRR vs IRR in Excel.

#3 MIRR

Formula: =MIRR(cash flows, cost of borrowing, reinvestment rate)

Here is another variation of the internal rate of return that’s very

important for finance professionals. The M stands for Modified, and
this formula is particularly useful if the cash from one investment is
invested in a different investment.

For example, imagine if the cash flow from a private business is then
invested in government bonds.

If the business is high returning and produces an 18% IRR, but the cash
along the way is reinvested in a bond at only 8%, the combined IRR will
be much lower than 18% (it will be 15%, as shown in the example
below).

Below is an Example of MIRR in action.

To learn more, check our free Excel Crash course.

#4 PMT

Formula: =PMT(rate, number of periods, present value)

This is a very common function in Excel for finance professionals

working with real estate financial modeling. The formula is most easily
thought of as a mortgage payment calculator.

Given an interest rate, and a number of time periods (years, months,

etc.) and the total value of the loan (e.g., mortgage) you can easily
figure out how much the payments will be.

Remember this produces the total payment, which includes both

principal and interest.

See an example below that shows what the annual and monthly
payments will be for a $1 million mortgage with a 30-year term and a
4.5% interest rate.
To learn more, see our real estate financial modeling course!

#5 IPMT

Formula: = IPMT(rate, current period #, total # of periods, present

value)

IPMT calculates the interest portion of a fixed debt payment. This Excel
function works very well in conjunction with the PMT function above.
By separating out the interest payments in each period, we can then
arrive at the principal payments in each period by taking the difference
of PMT and IMPT.

In the example below, we can see that the interest payment in year 5 is
$41,844 on a 30-year loan with a 4.5% interest rate.
#6 EFFECT

Formula: =EFFECT(interest rate, # of periods per year)

This finance function in Excel returns the effective annual interest rate
for non-annual compounding. This is a very important function in Excel
for finance professionals, particularly those involved with lending or
borrowing.

For example, a 20.0% annual interest rate (APR) that compounds

monthly is actually a 21.94% effective annual interest rate.

See a detailed example of this Excel function below.

#7 DB

Formula: =DB(cost, salvage value, life/# of periods, current period)

This is a great Excel function for accountants and finance

professionals. If you want to avoid building a large Declining Balance
(DB) depreciation schedule, Excel can calculate your depreciation
expense in each period with this formula.

Below is an example of how to use this formula to determine DB

depreciation.
In financial modeling, analysts typically build out a depreciation
schedule manually. To learn more, check out our series of financial
modeling courses.

#8 RATE

Formula: =RATE(# of periods, coupon payment per period, price of

bond, face value of bond, type)

The RATE function can be used to calculate the Yield to Maturity for a
security. This is useful when determining the average annual rate of
return that is earned from buying a bond.
#9 FV

Formula: =FV(rate, # of periods, payments, starting value, type)

This function is great if you want to know how much money you will
have in the future, given a starting balance, regular payments, and a
compounding interest rate.

In the example below, you will see what happens to $25 million if it’s
grown at 4.5% annually for 30 years and receives $1 million per year in
additions to the total balance. The result is $154.6 million.
To learn more, check out our Advanced Excel Formulas Course.

#10 SLOPE

Formula: =SLOPE(dependent variable, independent variable)

Finance professionals often have to calculate the Beta (volatility) of a

stock when performing valuation analysis and financial modeling. While
you can grab a stock’s Beta from Bloomberg or from CapIQ, it’s often
the best practice to build the analysis yourself in Excel.

The slope function in Excel allows you to easily calculate Beta, given the
weekly returns for a stock and the index you wish to compare it to.

The example below shows exactly how to calculate beta in Excel for
financial analysis.
To learn more, check out our valuation courses online.

Download CFI’S Free Excel for Finance Functions Template

Complete the form below to download our free Excel for Finance
Functions template!

First name* Email*

Enter your first name Enter your email address
 Download Now

* By submitting your email address, you consent to receive email messages (including discounts and
newsletters) regarding Corporate Finance Institute and its products and services and other matters
(including the products and services of Corporate Finance Institute's affiliates and other organizations). You
may withdraw your consent at any time.

This request for consent is made by Corporate Finance Institute, 801-750 W Pender Street, Vancouver,
British Columbia, Canada V6C 2T8. www.corporatefinanceinstitute.com.
learning@corporatefinanceinstitute.com. Please click here to view CFI`s privacy policy.

More Excel for Finance Resources

CFI now offers the Business Essentials Bundle with courses on

Microsoft Excel, Word, and PowerPoint, business communication, data
visualization, and an understanding of corporate strategy. To keep
learning, we suggest these resources:

Convert Time to Seconds in Excel

Excel Current Date and Time
Group in Excel
NETWORKDAYS Function
Interactive Finance Career Map
See all Excel resources

Get Certified for Financial Modeling

(FMVA)®
Gain in-demand industry knowledge and hands-on practice
that will help you stand out from the competition and become
a world-class financial analyst.
 Learn More

Share this article

Company

Certifications

CFI For Teams

Support

Community

TrustScore 4.4
696 reviews

   
Privacy Policy Terms of Use Terms of Service Legal

© 2015 to 2025 CFI Education Inc.