Excel's Formula - sisman

Chapter 16: Intentional Circular References 419
A reader of the first edition of this book pointed out another way to approach this
problem without using a circular reference. Use the following formula to calculate the
Net_Profit cell:
=(Gross_Income-Expenses)/(1+Pct)
Then calculate the Contributions cell using this formula:
=Pct*Net_Profit
You can access the workbook, net profit (circular).xlsm, shown in Figure 16-4,
on the companion CD-ROM. For your convenience, the worksheet includes a button
that, when clicked, executes a macro that displays a dialog box that lets you toggle the
iteration setting. This makes it easy to experiment with various iteration settings.
Depending on your security settings, you may see a Security Warning when you open
this workbook. In addition, the CD-ROM contains a file that demonstrates how to perform
this calculation without using a circular reference, named net profit (not
circular).xlsx.
The Formula tab of the Excel Options dialog box includes three controls relevant to circular
references:
Enable Iterative Calculation check box: If unchecked, Excel does not perform iterative
calculations, and Excel displays a warning dialog box if you create a formula that has a
circular reference. By default, this box is unchecked. When creating an intentional circular
reference, you must check this check box.
Maximum Iterations: Determines the maximum number of iterations that Excel will perform.
This value cannot exceed 32,767 and cannot be less than 1.
Maximum Change: Determines when iteration stops. For example, if this setting is .01,
iteration stops when a calculation produces a result that differs by less than 1 percent of
the previous value.
Calculation continues until Excel reaches the number of iterations specified in the
Maximum Iterations box, or until a recalculation changes all cells by less than the
amount you set in the Maximum Change box (whichever is reached first). Depending on
your application, you may need to adjust the settings in the Maximum Iterations field or
the Maximum Change field. For a more accurate solution, make the Maximum Change
field smaller. If the result doesn’t converge after 100 iterations, you can increase the
Maximum Iterations field.