Microsoft Office

Part V
Analyzing Data with Excel
Avoid Hard-Coding Values in a Formula
The mortgage calculation example, simple as it is, demonstrates an important point about spreadsheet design:
You should always set up your worksheet so that you have maximum flexibility to make changes. Perhaps the
most fundamental rule of spreadsheet design is the following:
Do not hard-code values in a formula. Rather, store the values in separate cells and use cell references in the
formula.
The term hard-code refers to the use of actual values, or constants, in a formula. In the mortgage loan example,
all the formulas use references to cells, not actual values.
You could use the value 360, for example, for the loan term argument of the pmt function in cell C11. Using a
cell reference has two advantages. First, you have no doubt about the values that the formula uses (they aren’t
buried in the formula). Second, you can easily change the value — which is easier than editing the formula.
Using values in formulas may not seem like much of an issue when only one formula is involved, but just
imagine what would happen if this value were hard-coded into several hundred formulas that were scattered
throughout a worksheet.
FIGURE 36.1
This simple worksheet model uses four input cells to produce the results.
You can answer these questions by simply changing the values in the cells in range C4:C7 and observing the
effects in the dependent cells (C10:C13). You can, of course, vary any number of input cells simultaneously.
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