Definition
The PERCENTILE Excel Function is a statistical tool used in finance to determine the nth percentile of a range of values. This means it finds the value below which a percentage of data falls. For example, using this function to calculate the 90th percentile, it returns the value below which 90% of the observed values fall.
Key Takeaways
- The PERCENTILE Excel Function is a built-in statistic function used to find out the percentile rank from a set of values. It shows how values in a range or array are distributed across percentiles.
- There are two forms of the PERCENTILE function: PERCENTILE.INC and PERCENTILE.EXC. The PERCENTILE.INC function calculates the percentile for a value in a data set, inclusive, meaning it includes the first and last data points in the data set. PERCENTILE.EXC, on the other hand, excludes the 0th and 100th percentile, delivering results for percentiles strictly between the smallest and largest values.
- The PERCENTILE function can be a vital tool for data analysis, as it aids in understanding the distribution of data points within a dataset. It can provide useful insights into how given set of data is spread and is commonly used in fields like finance, business analytics, and statistics.
Importance
The PERCENTILE Excel function is crucial in finance due to its analytic capabilities, allowing financial analysts to understand data distribution within a particular data set.
It aids in identifying the relative standing of a value within a data set, such as an investor’s portfolio performance compared to all possible outcomes.
This function is useful in risk assessment, preparing financial forecasts, determining the minimum profit margin, or identifying investment risk levels.
Additionally, it provides an understanding of market trends based on historical data, facilitating strategic decision-making in investment and asset management.
Hence, the PERCENTILE Excel function plays an integral role in financial analysis and investment strategies.
Explanation
The PERCENTILE Excel Function is enormously helpful in data analysis, particularly when dealing with large datasets. This function essentially finds the k-th percentile of values in a specified range, where k stands for the percentile you’re seeking. For instance, if you’re looking for the 20th percentile, k would equal 0.2.
The purpose of the PERCENTILE function is to provide a precise understanding of how a particular value compares to the rest of the dataset. This enables better decision-making strategies, where the decisions are driven by quantifiable evidence rather than mere assumptions. Moreover, the PERCENTILE Function can be immensely beneficial for making standards or benchmarks.
Industries often use percentiles to evaluate performance of entities and establish standards. For example, in the banking sector, it may be used to allocate resources based on the percentile score of various branches. Similarly in academics, determining percentile scores can help to conceptualize the relative ranking of a student within a larger group.
Hence, the PERCENTILE Function proves to be a powerful tool that can provide a deeper comprehension of relative standing in comparison to the complete dataset.
Examples of PERCENTILE Excel Function
School Grading Evaluation: A school teacher could use the PERCENTILE function to determine how students score compared to their peers. For example, if a math teacher inputs all of the test scores from his class into Excel, using the PERCENTILE function can help him find out the 90th percentile. This can show what score is higher than or equal to 90% of the students’ scores.
Sales Performance: A sales manager could use the PERCENTILE function to measure sales performance among a sales team. If the manager inputs the amount each salesperson sold in a month, he could use the PERCENTILE function to find the 75th percentile. This would show the amount that 75% of the sales team sold less than, and 25% of the sales team sold more than.
Health Sector – Body Mass Index (BMI): A health expert can apply the PERCENTILE function to evaluate the BMI statistics of a set of people within a locality. This can help them find out, for example, the 50th percentile which provides the median BMI figure. This will give a context as to how most people are doing in terms of their weight, compared to extreme cases. The percentile function thus offers an insight to the health professional on where their overall population falls within the spectrum of BMIs, from the problems of underweight to obesity.
FAQ Section: PERCENTILE Excel Function
What is the PERCENTILE Excel Function?
The PERCENTILE function in Excel is a statistical function that calculates and returns the kth percentile of a set of values. In other words, it finds the value below which a given percentage of observations falls.
How to use the PERCENTILE Excel Function?
To use the PERCENTILE function, you need to specify two arguments: the array of data from which the percentile is to be calculated, and the percentile value itself. The formula should look like this: PERCENTILE(array, k).
What is the percentile ‘k’ value in PERCENTILE Function?
The ‘k’ value in the PERCENTILE function represents the percentile value. This should be a decimal number between 0 and 1. For example, for the 20th percentile, ‘k’ would be 0.2, and for the 90th percentile, ‘k’ would be 0.9.
What kind of data can I use in the PERCENTILE Excel Function?
You can use both numeric and logical values (TRUE/FALSE) in the array argument of the PERCENTILE function. The function ignores text and empty cells.
What happens if I use a ‘k’ value outside the range 0 to 1?
If you use a ‘k’ value that falls outside the range of 0 to 1 in the PERCENTILE function, Excel will return a #NUM! error.
Related Entrepreneurship Terms
- Quantile Excel Function
- PercentRank Excel Function
- Percentrage Excel Function
- Data Analysis Excel tool
- Descriptive Statistics in Excel
Sources for More Information
- Microsoft Support: A platform where you can get reliable information on the PERCENTILE Excel Function as well as other features of Microsoft products.
- Excel Easy: A beginner-friendly website that offers easy-to-follow guides and examples for many Excel functions, including PERCENTILE.
- ExcelTip.com: Provides tips, tricks, and solutions to Excel problems, including detailed instructions for using the PERCENTILE function.
- Dummies: Known for their comprehensive and user-friendly guides, this website has plenty of resources for understanding Excel functions like PERCENTILE.
