As you probably know, to create an Excel formula, you begin by typing an equal sign: this distinguishes it from other types of data. A formula consists of a series of expressions. There are three key components in these expressions: arithmetic operations, such as add and subtract; Excel functions; and cell references.

To create a formula which gives us the total of two of the numbers in a spreadsheet (say 24 and 12), we could simply type "=24 + 12". When we press the Enter key, we would get the correct result. However, the formula would have no link to the two cells containing the numbers. If the content of the cells were to change, the formula would still return the old result.

Obviously, the best solution is to ensure that our formula contains a reference to the two cells in question. The simplest method of doing this is to click on the first cell having typed the equal sign. Excel then automatically creates a reference to the cell. Next type a plus sign and click the second cell. Excel puts in a reference to the second cell and we then enter the formula either by clicking on the Enter button (on the left of the formula bar) or pressing Enter on the keyboard.

Now that our formula contains a reference to these two cells, any time the cell contents change, the result returned by formula will be updated.

If this was the only way of performing calculations in Excel, formulas would very quickly become extremely long and very complex. To avoid this, we can use Excel's built-in functions. Functions perform complex mathematical calculations without us having to worry about how the result is arrived at.

For example, imagine that we wanted to add up the contents of a hundred different cells. If we relied purely on addition, we would end up creating a formula with a hundred different arguments; in other words, a hundred cell references to each of the cells containing the numbers. Thankfully, we can use the SUM function instead.

To use a function in a formula, type "=" followed by the name of the function. Next type open brackets and enter the arguments of the function. The arguments of the function are the values required by that function in order to return a result. In the case of the SUM function, we simply need to specify which cells contain the numbers we want to total. We can do this by clicking or dragging across the cells that contain those numbers.

Having entered references to all the cells containing numbers that we want to total, press the Enter key to add the formula to the worksheet. You don't even need to put in the closing parentheses. Excel will close them automatically.