What Is Normdist Function In Excel?

What Is Normdist Function In Excel?

Almost 750 million users worldwide use MS Excel to present and analyze data. For an accountant, it is the ultimate weapon for functioning, budgeting, preparing financial statements, and creating balance sheets. For a financial analyst, the NORMDIST function is very useful in the Stock Market. As professionals, we need to balance out the chance of risk and return and aim for the highest ROI(RETURN ON INVESTMENT). The normdist function helps to balance the risk and return by using the parameter of mena for return and standard deviation for risk if we want to find the probability of observation in the distribution falling above or below a given value. 

For example, a company owner sells bike helmets for children and adults. They started selling helmets for men and women separately. The company analyzed that each helmet’s size followed the normal distribution curve, with each having a separate mean and variance. So, using the normdist function calculator, the company can order the helmets in the appropriate number and size.  

Normdist Function

The Normdist Function is one of the statistical functions used in Excel. Data’s mean and standard deviation are required to yield a normal distribution. It will return to the standard normal distribution. NORMDIST(x, mean,standard_dev, cumulative) is a normdist function calculator parameter. 

The Normdist function parameters are:

  1. X: The value we want to calculate the distribution.
  2. Mean: The AM of the distribution.
  3. Standard_dev: This is the standard deviation of the distribution.
  4. Cumulative: It is the logical value. Logical values are TRUE or FALSE. 
  5. The formula for calculating the normal distribution:

=NORMDIST(x,mean,standard_dev,cumulative)

Characteristic of the NORMDIST function: 

  • The normdist function accepts only numeric values.
  • If the specific standard deviation is less or equal to zero, the NORMDIST function returns an error.
  • If the input is not numeric, the NORMDIST function gives an error. 

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How do you calculate Normdist manually?

A normal distribution is an unimodal and symmetrical distribution with a bell-shaped curve. 

Suppose a friend has an IQ above 130. We know the population mean IQ is 100, and the standard deviation from IQ is 15. Based on this data, we can calculate the probability that our friend has an IQ above 130.  

Normdist Function
Normdist Function

The cumulative distribution function is 0.9772…..

The Probability Mass Function is 0.00359…..

How do you calculate normal distribution in Excel?

Follow the below steps one by one to achieve the desired normal distribution in Excel:

1. Enter the data in the Excel sheet.

It starts by entering the data into the columns and rows of the Excel sheet. IExcel reads the rows and column values effectively, which helps the program run effectively. If you are working with a single set of values, like a vertical column in the Excel sheet, it will help Excel work with the column the best. If you are working with multiple data sets, placing each one of its columns helps differentiate between them. 

2. Finding the Mean of the Excel data:

To calculate the mean of the data is a simple function. If you place your data in a single column, find the empty cell of the column and apply the average formula within it. The AVERAGE function returns the means of the data. Use this syntax to calculate the mean of the data:

=AVERAGE(cell range)

The elements in the function used are

  • “=” tells Excel to perform a function
  • “Average” is a function you want Excel to perform.
  • “Cell range” is the cell range where the data is selected from the data in the Excel sheet. For example, you can write this function as A1:A64.

 3. Finding the Standard Deviation of the Excel data set:

Just like you find the mean of the data, you can also find the standard deviation with the Excel function. Enter the standard deviation formula as you place the data in the column and the next cell. You will use the standard deviation formula in this way:

STDEV.P function. If you enter the data of the entire population, then use this STDEV.S. If you are unsure of the data, use the STDEV.S function. 

Both the formula’s syntaxes are:

=STDEV.P(cell range)

=STDEV.S(cell range)

Where: 

  • = is required before performing a function 
  • “=STDEV.P” and “=STDEV.S” are important function components.
  • “Cell range” contains the selected data.

4. Select a value for the distribution:

When you have a list of data, choose a number that fits your range of data. The cell ranges give a statistical measure. 

5. Type the NORM.DIST function 

Select the blank cell in your Excel spreadsheet and type NORM.DIST function. Put the = sign before the norm. dist function and then press the enter key. It will find the normal distribution of the data based on the value of x you had chosen.  

6. Save your Excel Spreadsheet 

After getting the function’s value, you can save your Excel sheet. To do so, navigate to the “File” button on the Home tab and click the Save button. Before clicking on the Save option, make sure where your file will be saved in the memory location. You can also automatically save the file through Ctrl+S. 

Normal distribution function can be used in Excel through two ways:

  • =NORM.DIST
  • =NORMINV

The following are the ways you use the Normal distribution function:

=NORM.DIST(x, mean, standard_dev, cumulative)

If the cumulative is “TRUE,” then =NORM.DIST will calculate it, that is, whether the value is above or below that value. 

Let’s take an example:

If the mean value is 80, the standard deviation is 3 x=83, and the cumulative value is true, find the normal distribution curve for the above values. 

To do so type the formula “=NORM.DIST(x, mean, standard_dev, cumulative)”. Add value to them. 

Normdist Function

See how to implement the formula. 

After pressing the enter key, you will see the result.

Normdist Function

The result will look like it.

2. If the cumulative value is “FALSE”, then NORM.DIST will calculate the value of the probability mass function for a specific value rather than the cumulative distribution function.

Let’s understand this by taking the same values in the above example.

You have a mean value of 80, a standard deviation of 3 x=83, and a cumulative value of False. Find the normal distribution curve for the above values. 

To do so type the formula “=NORM.DIST(x, mean, standard_dev, cumulative)”. Add value to them. 

Similarly, we have applied the same formula but with the cumulative=” True”.

Not only for the Excel sheet, but you can also use the normdist function Google Sheets to calculate the value of normal distribution for a given value, mean, and standard deviation. It returns the probability of a value occurring within the specific range. 

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