Task Instructions
In cell B7, create a formula using external and internal worksheet references, that subtracts cell B9 on the Expenses worksheet of the PB Expenses.xlsx file, from cell B5 on the Income Statement worksheet of the PB Financials.xlsx file.
PB Financials.xlsx – Excel
Tell me what you want to do
Precision Building Profit and Loss Statement
Sales
Direct Costs $
Gross Margin $
55,140,555
35,841,361
19,299,194
NET INCOME
Income Statement
The correct answer and explanation is:
To create the required formula in cell B7, follow these steps:
Formula Construction:
- Reference PB Financials.xlsx (Internal Reference):
- The Income Statement worksheet contains B5, which we will reference.
- Reference PB Expenses.xlsx (External Reference):
- The Expenses worksheet contains B9, which will be subtracted.
The formula syntax follows:
='[PB Financials.xlsx]Income Statement'!B5 - '[PB Expenses.xlsx]Expenses'!B9
Explanation (300 Words):
In Microsoft Excel, referencing external workbooks and internal worksheets within formulas allows users to analyze data across multiple files. In this case, the formula in cell B7 extracts financial data from two different Excel workbooks: PB Financials.xlsx and PB Expenses.xlsx.
The formula:
='[PB Financials.xlsx]Income Statement'!B5 - '[PB Expenses.xlsx]Expenses'!B9
performs a simple subtraction operation where:
'[PB Financials.xlsx]Income Statement'!B5: Fetches the value from cell B5 in the Income Statement worksheet of PB Financials.xlsx.'[PB Expenses.xlsx]Expenses'!B9: Retrieves the value from cell B9 in the Expenses worksheet of PB Expenses.xlsx.- The subtraction (
-) calculates the difference between the income and the expenses.
This formula is crucial in financial reporting because:
- Dynamic Updates: Any changes in PB Financials.xlsx or PB Expenses.xlsx automatically reflect in B7.
- Simplifies Consolidation: It eliminates the need to manually copy data between files.
- Error Reduction: Ensures accurate calculations by referencing source data directly.
When working with external references, ensure:
- Both PB Financials.xlsx and PB Expenses.xlsx are accessible.
- The file paths remain correct to avoid
#REF!errors.
If the files are closed, Excel stores the full file path:
='C:\Users\Documents\[PB Financials.xlsx]Income Statement'!B5 - 'C:\Users\Documents\[PB Expenses.xlsx]Expenses'!B9
This method streamlines financial analysis while maintaining accuracy.