How To Set A Fixed Cell In An Excel Formula Goal Seeking in Excel

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Goal Seeking in Excel

Microsoft Excel is a phenomenally powerful calculator. You can create spreadsheets with 10,000 rows of data and calculate subtotals instantly. Indeed, if you change your details, all totals will be updated automatically. That said, it’s not too impressive. If our quarterly revenue is $1 million and we secure another $20,000, we can update our subtotal without recapping the revenue from scratch.

So it’s more impressive that Excel can do the same with statistical functions. If you’ve ever drawn a chart in Excel, you may be aware that you can add a line of best fit. These lines of best fit are calculated using a method known as regression. Basically, you need to calculate the distance of each point from the line and minimize the sum. The math is a bit more complicated, but the bottom line is that every time you change the data, you have to rerun the analysis.

A well-designed spreadsheet can calculate any output from the raw data. However, this is not always enough. Sometimes the output is fixed and the raw data changes. Let’s say you run an investment firm and want to offer fixed income to your clients. An Excel expert could create a very complex model to calculate the likely return on investment over a specified period. You can then calculate the internal rate of return you are offering to your customers.

The problem is that you are not interested in the revenue you provide to your customers; it is fixed. Instead, you worry about how much money you expect from the mutual fund while still providing a satisfactory return to your investors. If you have $1 and owe investors a quarter, you can calculate your profit using a simple formula.

Unfortunately, IRR is time dependent, so the amount you withdraw depends on when you withdraw it. It is enough if, for example, the only way to calculate the amount charged over half the life of the fund is by trial and error. If you are evaluating multiple investment options, this can be a very time-consuming process.

That’s why Microsoft has created Goal Seek to help develop your spreadsheet. Starting with Excel 2007, it is available from the data ribbon. In earlier versions of Excel, it was in the Tools menu. It gets straight to the point. It asks what value you want to fix (in this case the investor’s return), what you want to fix it to, and what you want to change. All fields accept cell references. It then calculates the input by trial and error.

It has one serious limitation. Finding purpose is not a formula. It is not permanently located in the spreadsheet or selected cells. Therefore, you need to run Goal Seek again every time you change the spreadsheet. Often this is acceptable because you have built the model specifically to calculate that one parameter. Having said that, there are cases where it is not enough.

The good news is that Goal Seek can be accessed and run from within Visual Basic. An Excel programmer can write a short script to ensure that your variables are recalculated every time you change your spreadsheet. Because Goal Seek takes a significant amount of time, it can negatively impact your page’s performance. The beauty of accessing Goal Seek in Visual Basic is that you can turn off any processes that cause the function to run slowly, such as refreshing the screen.

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