A formula is a piece of data in a spreadsheet cell that performs a given calculation. A formula consists of values, mathematical operators, cell addresses, range names, other formulas, integrated functions and, in some cases, text.
Basic Arithmetic Operation
Formulae build up powerful arithmetic operations, by using arithmetic operators in combination with cell addresses or constants. Using formulae, we can build relationship among data in the worksheet. The operators in a formulae are executed in order of their priority based on the BODMAS rule.

(Figure 4.11)

Formulas always begin with an equal sign (=) followed by the equation. This equation consists of a cell address (e.g. A1) or a fixed number (e.g. 100). You can use the value contained in a cell to perform a calculation, but we recommend that your formulas contain the address(es) of the value(s). There is a very good reason for this, if you modify a cell’s value at a later date, any formula that referred to that cell’s address will automatically reflect your change. If your formula contained the value rather than the cell address, you will have to adjust the formula every time you modify a cell.
The formula used to add the value of A1 to that in B1 is: =A1+B1. If you do not include the equal sign, Excel will consider this entry as non-numeric data and not as a formula. The non-numeric data will be displayed in the cell and will not be the results of the calculation. Remember to move the cursor to the cell in which the result should be displayed.
For this exercise,we will create a new worksheet sales as shown in the following figure and we will calculate the sales tax by multiplying the price of the item by 15% to obtain the amount of the sales tax.

(Figure 4.12)

· First, move the cursor to cell C3, since this is where we want the answer to be displayed. Enter this formula: =B3*15%. Before pressing the ENTER key, notice that the formula is displayed, exactly as written, in the cell. Press the ENTER key.
· Your answer should be 2.3985. 
(Do not perform any calculations to find the tax amounts for the other items yet.)
· Now enter a formula in D3 cell and show the sum of cells B3 and C3 Remember to put the equal sign in front of the formula. 
· The result obtained should be 18.3885