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Understanding Circular References in Excel

This document discusses circular references in spreadsheets where cell dependencies form a loop. Specifically, it provides an example where cells A, B, and C all depend on each other either directly or indirectly. While logically correct, this results in iterative calculations that need to be resolved. The document recommends enabling the iterative calculation option under the Formulas menu in Excel to remedy circular references. It also provides an example spreadsheet for a company to calculate revenue, costs, net profit, and charity donation as 10% of net profit.

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Tarun Imandi
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6 views3 pages

Understanding Circular References in Excel

This document discusses circular references in spreadsheets where cell dependencies form a loop. Specifically, it provides an example where cells A, B, and C all depend on each other either directly or indirectly. While logically correct, this results in iterative calculations that need to be resolved. The document recommends enabling the iterative calculation option under the Formulas menu in Excel to remedy circular references. It also provides an example spreadsheet for a company to calculate revenue, costs, net profit, and charity donation as 10% of net profit.

Uploaded by

Tarun Imandi
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Circular Reference

Dependency in Loop (refereeing to the same


cell directly or indirectly)
B depends on A
C depends on B
A depends on C
Logically correct
Iterative calculation
Remedy
File Tab > Options> Formulas >Enable
iterative check box
Exercise
Company A
Revenue 50,000 per month
Cost: 20,000 per month
Charity : 10 % of Net Profit
(assuming tax to be zero for simplicity )

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