Microsoft Office Tutorials and References
In Depth Information
Intentional Circular References
Figure 16-3: To calculate a circular reference, you must select the Enable Iterative Calculation check box.
Figure 16-4 shows a simple example of a worksheet that uses an intentional circular reference. A
company has a policy of contributing 5 percent of its net profit to charity. The contribution itself,
however, is considered an expense and is therefore subtracted from the net profit figure —
producing a circular reference.
Figure 16-4: The company also deducts the 5 percent contribution of net profits as an expense (shown in
cell B3), creating an intentional circular reference.
You cannot resolve the circular reference unless you turn on the Enable Iterative
Calculation setting.
The text in column A corresponds to the named cells in column B, and cell C3 is named Pct. The
Contributions cell (B3) contains the following formula:
=Pct*Net_Profit
The Net_Profit cell (B4) contains the following formula:
=Gross_Income–Expenses–Contributions
These formulas produce a resolvable circular reference. When you change either the Gross_
Income or the Expenses cell, Excel keeps calculating until the formula results converge on a
solution.
 
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