Microsoft Excel is built on a regime of Columns and Rows with the intersection of these two elements giving us our cells. The cells in Microsoft Excel are always named Columns and then Rows, so a typical cell address would look something like - AB256. This particular cell is found on column AB and in row 256. The reference I wrote there is very important as it tells me something significant, that is, it tells me the cell address is a relative cell address. So what does this mean? Well there are two types of references used in Microsoft Excel which is an Absolute Reference and a Relative Reference. On a day-to-day basis, the relative and absolute reference doesn't really affect the operations of your spreadsheet. Where it does become a noticeable issue is when you start copying formulas from one cell to another.

Lets investigate the difference between the two …

A Relative Reference is one that when copied from one position to another will adjust the formula cell address to suit the position it is in. For example if you have a formula in cell address C4 that was =B4*C1 and then copied the formula into say C5 what you will notice is that the cell addresses of the formula will change to =B5 * C2. The reason this has occurred is that the cell addresses are in fact relative addresses. That is the cell address is relative to its current position.

To change a cell address from being relative to being absolute we simply add dollars signs to the cell address in this way - $C$5. What this address is now saying to us is that we must absolutely refer to column C and absolutely refer to Row 5. This means that if we apply the dollar symbols to our previous formula in cell C4 which is =$B$4 * $C$4 and then copy our formula to cell address C5 you will notice this time round that the cell addresses didn't change. The reason is that by adding the $ symbols to the cell address we are telling the formula that regardless of where you place the formula you must absolutely refer to Column B and Row four thus we have $B$4.

There are many reasons why you may use Relative References over Absolute references and vice versa. One of the most common one for using absolute references is when you have a specific value you want to refer to in a formula. For example, lets say you are building a mortgage calculator and you need to refer to an Interest Rate. To ensure you are always referring to the right cell that has the interest rate value you may set an absolute value.

In Microsoft Excel there is also a reference called a mixed reference. Essentially what this means is that only either the Column or the Row has the dollar symbol, for example $C3. What this is telling us is that in the formula you must absolutely refer to column C but the value in the row is relative to the position of the formula.

There are a number of ways that you can enter Relative and Absolute values into a formula. One technique is that you can simply type the $ symbols next to the Row or the Column. However there is an alternative. Once you have typed in the Cell address like C4 you can move back into the cell address and then use the F4 key to toggle the cell reference from Relative to Absolute to a Mixed References.

Absolute and relative references are extremely important in Microsoft Excel and they ensure that the formulas you are creating actually refer to the correct cells. Remember one simple rule, if the cell addresses have a $ symbol next to it, it means you must absolutely refer to either the column or the row.

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