Limiting Precision

There may be times when you want to limit the precision used in computations by Excel. This may come in particularly handy when you are working with set-precision numbers, such as currency amounts. As you learned in other issues of ExcelTips, Excel maintains fifteen digits of internal precision, but that may not be how you have your information displayed.

This dichotomy can lead to some interesting results. For instance, let's say that you have a number stored in Excel, which is 1.44. You want to figure out what 110% of that number is, and then double it. You put the original number (1.44) in cell A1. In cell A2 you place the formula =1.1*A1. In cell A3 you place the formula =2*A2. You then format each of the three cells for Currency formatting. At this point, A1 will contain $1.44, A2 will contain $1.58, and A3 will contain $3.17.

At first glance, it would appear that the result in A3 is wrong. After all, two times $1.58 is $3.16, not $3.17. The difference is due to how rounding is done and how Excel performs internal calculations. It turns out that the value in cell A2 is not really $1.58, but 1.584, and the value in cell A3 is then 3.168. When rounded, it becomes 3.17.

If you want to get around this problem, you can do so by changing how Excel handles precision. Follow these steps:

1. Choose Options from the Tools menu. You will see the Options dialog box.
2. Make sure the Calculation tab is selected. (Click here to see a related figure.)
3. Ensure that the Precision As Displayed check box is selected.
4. Click on OK.

When you do this, Excel only performs calculations using the digits you have displayed in a cell. In the above example, it means that cell A3 now contains $3.16 because the calculation on A2 was done on only $1.58, as displayed.

You should note that when you change this precision setting on Excel, the numbers maintained by Excel are permanently changed. Thus, if you entered some numbers that had five digits to the right of the decimal, and then you displayed only two, changing the precision setting would permanently throw away three of the digits--those farthest to the right.