Excel is not only a great way to store and organize data, it is also a powerful calculation tool that can add, subtract, multiply and divide. When performing calculations, Excel uses the following order of operations: parentheses and exponents, multiplication and division, and addition and subtraction (PEMDAS).

**How the Order of Operations Works**

First, any operation(s) contained within parentheses will be calculated first followed by any exponents.

Second, division or multiplication is calculated. Excel does not have a preference for order for division or multiplication, but carries out these operations in the order they occur from left to right in the formula.

Third, addition or subtraction is calculated. Like multiplication and division, Excel evaluates the order for addition or subtraction from left to right in the formula.

Notice how, in the example formulas above, the formulas all begin with the equals sign ( = ). The equals sign tells Excel that you want to perform a calculation or enter a formulaâ€”if you do not use the equals sign in a formula, Excel will interpret the data inputted into the cell as text. Additionally, in Excel, the numbers in the sample formulas above can be replaced with cell references (i.e., A2 or B5, etc.) or other formulas that result in a value.