FDIST Excel Formula

Author Zaheer    Category Formulas     Tags ,

Excel is very popular computer software that is used by many financial analyst, accountants and finance managers. It is very useful program for financial calculations. Companies uses Microsoft excel for the management of billions of dollars portfolios, funds and investments. There are many built in formulas in excel to create financial reports and for analyzing risk. This software is also used for risk management purposes. There are many diversified formulas and other functions to cater different financial and statistical needs.  FDIST function (f distribution) is one of the built in formula in excel.  I am going to explain you the use of this formula in excel sheet.

FDIST function is built in formula in excel, it mean you do not have to enter it manually. This function is used to calculate the F probability distribution. You have to describe the variance of data samples for two values.  FDIST function is used to determine the degree of difference between two different values of data. For example, you can use the number of girls or boys entering the college, and by using the FDIST function find the diversity or variability in girls than in boys.

Syntax used for FDIST function in excel is (x degrees_freedom1, degree_freedom2)

Values for syntax (x degrees_freedom1, degree_freedom2), should be numerical i.e. 0 to 9, or the FDIST function will give the number value error.  It will also give the error if you enter the value of data in negative.

Now to enter the formula you should know that what does these variables stands for. Starting with “x”, it is the value which FDIST is used to evaluate.  “degrees_freedom1” is the numerator value for degrees of freedom, and “degree_freedom2” is the denominator value for the degrees of freedom.  You have to put these values to run the FDIST function and calculate the degree of variance in two data sets.

This degree of freedom of any variable is used to determine the number of its known and unknown variables and also relates them. It means that to evaluate the results you should know that if degree of freedom is higher than probability of variance in the sample will also be higher. It combines the probability distribution by calculating the degree freedom 1 and degree freedom 2. Then FDIST function calculates the probability of “x” by its specific value on the F distribution curve and results in a single value.

“x” value’s probability density means that what is the probability of x has of same variance as of any other value in the distribution. But it should be noted that it is not the exact value, as it may be depending on the value and other relative values of the degrees of freedom1 and degrees of freedom2. Shape of the F probability distribution which you get will define the probability density of value “x”. To find the return value place value of “x” on the distribution table in FDIST function and find the similar value for probability density. Hence FDIST function is very useful function of excel to compare the variability of two sets of data and find whether difference is significant or not.

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