Nesting Multiple Formulas in Excel: A Beginner’s Guide

Excel is a powerful tool that allows users to perform complex calculations and data analysis. One of the key features of Excel is its ability to nest, or combine, multiple functions together to create tiny miracles. Mastering nested functions can greatly enhance your productivity and efficiency in Excel. In this comprehensive guide, we will explore the concept of nested functions and provide practical examples to help you become proficient in using them.

What are nested formulas in Excel?

A nested formula uses the result of one calculation as an argument or part of another formula. This allows you to perform more than one calculation in a single entry to arrive at a final result.

In other words, the result of one formula becomes the input for another formula, creating a chain of calculations or operations. With nested functions, you can manipulate and analyze data by applying multiple functions sequentially.

Why use nested formulas?

A nested formula is usually greater than the sum of its parts. Combining functions offers significant benefits, including:

1. Enhancing flexibility and functionality: Nested functions enable you to utilize the full range of Excel's built-in functions (and increase their value exponentially) to suit your specific requirements.
2. Simplifying complex calculations: By breaking down a complex task into smaller steps using nested functions, you can simplify the overall calculation process.
3. Saving time and effort: Instead of creating separate formulas and intermediate calculations, nested functions allow you to perform multiple operations within a single cell.
4. Improving formula readability: Though nested functions can be complex, proper structuring and organization can make formulas easier to read and understand.

By understanding the syntax and structure of nested functions and learning how to utilize them effectively, you can unlock Excel's full potential and streamline your data analysis tasks.

How to create a nested formula in Excel

Creating a nested formula in Excel follows a systematic approach. Here are my best tips:

1. Confirm the need for nesting. First, find out whether there is a single Excel function that can perform the calculation you want. You can do this by using Excel’s “Insert Function” feature to search for a function by typing what you want it to do. If there isn’t one, you may need to nest two or more functions to achieve your goal. 
2. Start with the easiest part of the formula. Begin by entering the operation that should be performed first. This will also be the innermost function. You’ll then work your way outward, adding more layers with each additional function or argument.
3. Match all parentheses. Ensure every opening parenthesis has a closing match. This practice helps in avoiding errors when building formulas.
4. Test the formula. After creating your formula, test it with various inputs to ensure it works correctly in all expected scenarios.
5. Limit nesting levels. Excel allows you to nest up to 64 functions in a formula, but it's rarely practical or advisable to reach this limit. Too many nested levels can make your formulas complicated, prone to errors, and difficult to debug. As a rule of thumb, try to keep nesting to a minimum and use alternative approaches like helper columns if the nesting becomes too complex.

Examples of commonly-nested formulas

There are some operations that we need to perform quite often for which Excel does not have a single function. For these, we combine two or more functions to get the desired result. We’ll look at two examples below.

Example 1: IF/OR

(Performs a specific action if ANY of the following conditions is true)

“If the applicant’s credit score is greater than 700 OR if their income is greater than $40000, display a value of ‘Approved’ in column D. If neither condition is true, display a value of ‘Not Approved’ in column D.”

In this case, we should think about how Excel will logically process this calculation. It will first try to evaluate whether the conditions are true before taking any action. Therefore, that is the part of the formula we need to write first.

We use the OR function to determine if any of the stated conditions is true. If one or more is true, Excel returns the expression TRUE. If none of the conditions is true, Excel returns the expression FALSE.

=OR(B2>700,C2>40000)

For the first applicant, both conditions are true, so we get the default result TRUE.

We can now use the result of this formula to display an “Approved” status using the IF function.

=IF(OR(B2>700,C2>40000),"Approved","Not Approved")

Example 2: INDEX/MATCH

(Performs a two-dimensional lookup)

This is arguably one of the most popular function combinations in Excel. It works by searching for a value in a dataset and returning the corresponding value from a particular row or column.

With the advent of VLOOKUP, XLOOKUP, and all the other built-in functions that are being released in Excel all the time, there is definitely less need for this old favorite. However, if the version of Excel you’re using does not support XLOOKUP, you may be faced with certain limitations in VLOOKUP.

The INDEX/MATCH combination is usually the best workaround.

In the following example, we have a list of bus ticket prices to 10 destinations. We can create a formula that combines INDEX and MATCH to return the cost for any selected destination in cell B16.

We first want Excel to match the value in cell B16 to the same value in column A.

=MATCH(B15,A2:A11,0)

* We use 0 as the final argument to indicate that the values must be an exact match.

The value returned is 7, which means the value “Stormhaven” is in the 7th row of the array. 

We can now use this result inside the INDEX function to return the value that intersects at the second column of the dataset.

=INDEX(A2:B11,MATCH(B15,A2:A11,0),2)

Troubleshooting nested Excel formulas

It can be incredibly frustrating when you can’t get your Excel formula to work. That frustration rises exponentially with each additional layer of nesting, because you might not be sure what part of the formula caused the calculation to fail.

Here are my top tips for sorting things out when you can’t get your nested formula to work as expected:

1. Check for syntax errors. The most common issue with nested functions is syntax errors, which include misspelled function names, missing commas, or mismatched parentheses. Excel usually highlights syntax errors with prompts or error messages. Double-check each part of the formula for correct syntax.

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See: The 10 Most Common Errors in Excel and How to Fix Them

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2. Use formula evaluation. Excel’s Evaluate Formula tool is invaluable for troubleshooting nested functions. It allows you to see the calculation step-by-step, showing how Excel evaluates each part of the formula. This can help you pinpoint where a formula is not working as expected. You can find this tool under the “Formulas” tab in the “Formula Auditing” group.

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See: Formula Auditing Tools in Excel

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3. Simplify the formula. If a nested function isn't working, try breaking it down. Simplify the formula by separating it into smaller parts in different cells. This breakdown can make it easier to identify which part of the formula is causing the issue. Once each segment is verified, you can combine them again.

4. Verify data types. Ensure that the data types in your formula are compatible with each function’s requirements. For example, a function expecting a numerical input will not work correctly if it receives a text string. Check that the data in the cells used in your functions are of the appropriate type.

5. Check for hidden characters. Sometimes, data imported from other sources might include hidden characters, such as spaces or non-printable symbols, that can disrupt your functions. Use the TRIM function to remove extra spaces and the CLEAN function to remove non-printable characters.

6. Ensure logical flow. Verify that the logic of your formula makes sense. Nested functions can become confusing, so it’s important that each function is logically placed within the nest. Check that functions that depend on the results of others are correctly positioned. This may be the hardest part when you’re just getting started. If you’re still having trouble, use helper columns to plot each step sequentially.

7. Use conditional formatting for debugging. Apply conditional formatting to visualize data that meets specific conditions. This can help you understand how your data is being processed by your nested functions. For instance, highlighting all cells where a logical test is true can reveal unexpected patterns or errors.

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See: How to Use Conditional Formatting in Excel

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8. Refer to Excel documentation and other online resources. If you’re unsure how a specific function works within your nested formula, consult Excel’s built-in documentation or online resources. Understanding each function’s parameters and expected inputs can clarify how they should be integrated.

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Check out the GoSkills Excel resource library

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9. Ask for a second pair of eyes. Sometimes, you might be too close to the problem to see the issue clearly. Asking a colleague to review your formula can provide new insights and help you identify errors you might have overlooked.

10. Rebuild the formula. If all else fails, sometimes the best approach is to start over. Rebuilding the formula from scratch can often be quicker and less frustrating than trying to fix an uncooperative function. This also ensures that you systematically go through each step, which might help you spot what went wrong the first time.

Conclusion

Nested formulas are a cornerstone of proficient Excel use, enabling you to perform robust data analysis and calculations efficiently. By understanding and applying nested formulas, you enhance your ability to manage and analyze data effectively, making Excel a more powerful tool at your disposal.

Bear in mind that Excel’s capabilities are regularly updated by Microsoft, including the introduction of new functions like IFS, FILTER, and LET that can simplify what used to require nested functions. You should also stay updated with the latest Excel features like dynamic arrays, which can reduce the need for complex nested formulas.

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