What Is the Purpose of Using a Spreadsheet?

In its simplest form, a spreadsheet is a table of rows and columns that contains data, both text and numbers, on which you perform actions, such as sorting and calculations, both simple and complex. In business, spreadsheets are especially useful any time you have numerical data to store, organize, calculate and present in easily understood formats. Spreadsheets allow the business person to accomplish tasks as diverse as keeping track of receipts and financial forecasting and planning.

Spreadsheets hold any form of numbers. For a range of cells, you define how many decimal points the numbers will have and the kinds of numbers they are, such as date, time, currency, percentages and phone numbers. For example, within an employee expense claim spreadsheet, you may have a row for each employee in which the cells include the employee's name, employee number, phone number, the date of the expense claim and the dollar amount. Spreadsheets provide the ability to sort this data, so you can order the expense claim spreadsheet by name, by employee number or perhaps by dollar amount. Another option is to filter the data to remove certain rows or columns.

You can set up spreadsheets to automatically do any calculations you want. It doesn't matter what numbers are in the spreadsheet as you specify the range of cells on which to perform the calculation. Spreadsheet users usually place the result of the calculation at the end of the row or column being worked on. You can choose from a ready-made range of formulas provided in your spreadsheet or write your own from scratch. As well as simple sums and averages, it's possible to develop extremely complex, layered formulas in which the results of one calculation are put into the next calculation.

Spreadsheets allow you to ask "what if?" questions that are useful in business and financial planning. For example, in a spreadsheet of quarterly projections, you could change the numbers for operating expenses or sales forecasts and see what the effect is on profit. You can change one number at a time or a combination of them to represent what may happen in your business world, and the results of the "what if?" questions will help you in your business planning.

While spreadsheets are an essential tool for all areas of data recording and business planning, the dense rows and columns of numbers can look intimidating and might only be understandable by those who developed the spreadsheet. Spreadsheets provide the ability to view the data in a variety of graphical formats. Bar graphs highlight the ups and downs of data over time and are useful for comparing different elements at a given time; pie charts clearly depict the varied proportions of different elements. Other graphical representations of data often include line and scatter charts as well as surface and area graphs.