Definition
The IFERROR Excel Function is a tool used in spreadsheet calculations to manage error returns. This function checks for an error in a given expression or formula and returns a specified value if an error is found. If there’s no error, it will just display the original calculated result.
Key Takeaways
- The IFERROR Excel Function is a tool which allows you to handle errors conveniently. It tests an initial supplied formula and returns a specified value if the formula results in an error, allowing for cleaner management of error outcomes and prevention of error messages display.
- IFERROR can manage all types of Excel errors including #N/A, #VALUE!, #REF!, #DIV/0!, #NUM!, #NAME?, or #NULL!. It’s an alternative to nesting your formula inside several IF statements to handle different error types, thus simplifying and streamlining the error management process.
- The use of IFERROR should be carefull and well-judged as it can easily hide other critical or unforeseen errors, which can lead to wrong data interpretation. Therefore, applying this function should be to manage predicted errors, rather than as a blanket to cover all errors that might arise.
Importance
The IFERROR Excel Function is an essential tool in financial modeling.
It provides a powerful way to identify and manage errors within complex financial spreadsheets.
Whenever a formula coded into a spreadsheet returns an error, for instance due to division by zero, invalid cell references, or inappropriate data types, the IFERROR function intercepts these errors and replaces them with a pre-designated substitute value, or simply eliminates them.
This maintains the integrity of the dataset, ensures the accuracy of computations, and improves the efficiency of data analysis by streamlining the troubleshooting process.
In financial analyses where accuracy is fundamental, the IFERROR function proves invaluable.
Explanation
The IFERROR Excel Function is a crucial tool used to handle errors that may occur due to certain formulas or functions in Excel. It’s primary purpose is to acknowledge the possibility of errors and ensure that these errors are not left unattended to harm the overall integrity of the data being processed, and subsequently, the results being produced.
It is most commonly used when performing complex calculations or data extraction where there is a potential for errors to occur either because of users’ actions, misconceptions, gaps in data, or fallacies in logical flow. For instance, if a user attempts to divide by zero or a formula references a blank cell, Excel would ordinarily return an error message that could interrupt the flow of calculations or the compilation of data.
By using the IFERROR function, users can instruct Excel to perform a custom action or return a certain value in case of encountering an error. This could be a specified value, text message, or even another formula or function.
Therefore, by preventing the abrupt halting of operations due to errors and intelligently managing exceptions, IFERROR function enhances the robustness, reliability and user-friendliness of data processing in Excel.
Examples of IFERROR Excel Function
Sales Analysis: A real-world example of the IFERROR Excel function application could be in sales analysis. Suppose a business sales analyst wants to calculate the average sales per day for different products. They might divide the total sales by the number of days since the product was launched. However, some products might not have sold yet, meaning the total sales for the product is zero, and an error would be returned when you try to divide by zero. An IFERROR function could be used here to return a different value such as ‘0’ or ‘Not Yet Sold’ when an error is generated.
Inventory Management: In the case of calculating the cost per unit for items in an inventory, the cost of purchase might often be divided by the number of units received. However, if no units were received (perhaps due to an error or delay in the delivery), this will result in a division by zero error. Using the IFERROR function, the analyst can automatically replace this error with a specific note such as ‘No Units Received’.
Financial Modeling: In financial analysis or modeling, you may have situations where you’re forecasting based on previous data. For instance, if you’re calculating the growth rate based on last year’s figures. However, if the company was just established this year, the growth rate would show an error because there is no data for the previous year. By using the IFERROR function, you could set it to display ‘New Business’ instead of an error.
FAQs for IFERROR Excel Function
What is the IFERROR Excel function?
IFERROR is a function in Excel that is used when you want to handle errors in your formulas. If the formula returns an error, IFERROR will return another value you specify. If not, the formula’s result will be returned.
How do I use the IFERROR Excel function?
Your IFERROR formula should look like this: IFERROR(value, value_if_error). Value is the argument you check for an error, and value_if_error is the value returned if the formula finds an error in the argument.
Can you give an example of IFERROR function?
Suppose you have formula that divides two numbers: =A2/B2. If B2 has no value, you will get an error. You can manage this by using IFERROR: =IFERROR(A2/B2, “Error Occurred”). If B2 is blank, Excel will return “Error Occurred”.
Which errors can IFERROR handle?
IFERROR can handle all types of Excel formula errors, which include #N/A, #VALUE!, #REF!, #DIV/0!, #NUM!, #NAME?, or #NULL!.
Is there a difference between IFERROR and ISERROR?
Yes, while both functions handle errors, they do so in different ways. IFERROR returns a different specified value if the formula results in an error. ISERROR returns a Boolean, TRUE if the there’s an error and FALSE if there isn’t.
Related Entrepreneurship Terms
- Value: In IFERROR Excel Function, “value” is the argument that represents the expression or cell reference, which is checked for an error.
- Value_if_error: This is a required field in the IFERROR Excel function which specifies the value that should be returned when an error is found.
- Error values: These are special types of values that Excel returns when it encounters an error such as #N/A, #REF!, #NAME?, etc. IFERROR checks for these values.
- Formula logic: This term refers to the logical test or condition set in Excel. IFERROR function is part of Excel’s formula logic that validates whether an expression is erroneous or not.
- Data validation: This is a feature in Excel which controls the type of data or the values that users can input into a cell. IFERROR can be used in conjunction with data validation to handle errors effectively.
Sources for More Information
- Microsoft Support: The official site of Microsoft offers helpful information about IFERROR and other Excel functions.
- Exceljet: A website that offers quick, clean, and to-the-point examples of Excel functions, including IFERROR.
- TechOnTheNet: This source offers a range of examples and guide for a range of Excel functions, including IFERROR.
- Wall Street Prep: This site is a go-to for many financial professionals using Excel. It includes a very thorough breakdown of IFERROR.
