To use formulas (formula: A sequence of values, cell references, names, functions, or operators in a cell that together produce a new value. A formula always begins with an equal sign (=).) efficiently, there are three important considerations that you need to understand:
Calculation is the process of computing formulas and then displaying the results as values in the cells that contain the formulas. To avoid unnecessary calculations, Microsoft Office Excel automatically recalculates formulas only when the cells that the formula depends on have changed. This is the default behavior when you first open a workbook and when you are editing a workbook. However, you can control when and how Excel recalculates formulas.
Iteration is the repeated recalculation of a worksheet until a specific numeric condition is met. Excel cannot automatically calculate a formula that refers to the cell — either directly or indirectly — that contains the formula. This is called a circular reference. If a formula refers back to one of its own cells, you must determine how many times the formula should recalculate. Circular references can iterate indefinitely. However, you can control the the maximum number of iterations and the amount of acceptable change.
Precision is a measure of the degree of accuracy for a calculation. Excel stores and calculates with 15 significant digits of precision. However, you can change the precision of calculations so that Excel uses the displayed value instead of the stored value when it recalculates formulas.