Excel: Create Easier-to-Understand Formulas with Named Ranges

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Problem: How can I create easier-to-understand formulas?

  1. This formula is not very intuitive.

    Strategy: It would be easier to understand the results if each component of every formula were named for what it represented and not just for the cell it came from. You can therefore use named ranges to make formulas easier to understand:

    1. Select cell B3. In the Name box (the area to the left of the formula bar), type Revenue and press Enter.
    2. Select cell B4. Click in the Name box, type COGS, and press Enter.

  2. Type a name in the Name Box and press Enter.
    1. Clear the formula in B6. Reenter the formula and use the mouse to select the cells. Type =. Using the mouse, touch B3. Type -. Using the mouse, touch B4. Excel will enter the formula as =Revenue-COGS. This is easier to understand than a typical formula.

    Gotcha: You need a lot of foresight to use this technique. In order to have this work automatically, you are supposed to be smart enough to create the range names before you enter the formula.

  3. This formula is easier to understand.

    However, most people create a formula first and then decide to make the worksheet easier to understand. To assign range names after creating formulas, follow these steps:

    1. Select Formulas, Define Name dropdown, Apply Names. Gotcha: Don't click on the words Define Name; click on the dropdown icon to the right of Define Name.
    2. Select all the names you want to apply and click OK.

  4. Apply Names is hidden in the Define Name dropdown.

    Results: A formula like =B6-B11 will be updated to =GrossProfit-Expenses.

    Additional Details: One advantage of named ranges: they are always treated as an absolute reference. You don't need to add dollar signs to have the formula always point to that cell.