The predefined formulas in Microsoft Excel are referred to as functions, and the types include string functions, numeric or mathematical functions, statistical functions, logical functions and information functions. In addition to the functions, users can define their own formulas to implement on data in the spreadsheet.

Formulas perform calculations on values in a spreadsheet. In Excel, formulas always start with an equal sign. For example, the formula =2*3+5 multiplies two by three and adds the result to five. Formulas can also be used together with references, constants, functions and operators.

Functions use arguments that are in a particular order to perform calculations. Functions also start with an equal sign. The equal sign is then followed by the name of the function, an opening bracket, the arguments of the function separated by commas and a closing bracket. The arguments used can be formulas, constants or other functions. However, they must all produce valid values. An example of a function is =SUM(A1:A2), which uses the SUM function to add the values in cell A1 and cell A2.

Microsoft Excel users are also allowed to use other names to define cells, ranges of cells, formulas, constant values or Excel tables. This is normally done for better clarity and understanding.