Look up and retrieve information in a table
The VLOOKUP guide below explains how to use the VLOOKUP function in Excel to search for a value in the first column of a table and return a value in the same row from a specified column. The formula is structured as =VLOOKUP(lookup_value, table_array, col_index_num, [range_lookup]). Key steps include organizing data, specifying lookup and table ranges, and determining the match type (exact or approximate). It also discusses common uses in financial modeling and potential errors.
The VLOOKUP Function[1] in Excel is a tool for looking up a piece of information in a table or data set and extracting some corresponding data/information. In simple terms, the VLOOKUP function says the following to Excel: “Look for this piece of information (e.g., bananas), in this data set (a table), and tell me some corresponding information about it (e.g., the price of bananas)”.
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=VLOOKUP(lookup_value, table_array, col_index_num, [range_lookup])
To translate this to simple English, the formula is saying, “Look for this piece of information, in the following area, and give me some corresponding data from another column”.
The VLOOKUP function uses the following arguments:
The first step to effectively using the VLOOKUP function is to make sure your data is well organized and suitable for using the function.
VLOOKUP works in a left-to-right order, so you need to ensure that the information you want to look up is to the left of the corresponding data you want to extract.
For example:
In the above VLOOKUP example, you will see that the “good table” can easily run the function to look up “Bananas” and return the price since Bananas are located in the left-most column. In the “bad table” example you’ll see there is an error message, as the columns are not in the right order.
This is one of the major drawbacks of VLOOKUP, and for this reason, it’s highly recommended to use INDEX MATCH instead of VLOOKUP.
In this step, we tell Excel what to look for. We start by typing the formula “=VLOOKUP(“ and then select the cell that contains the information we want to lookup. In this case, it’s the cell that contains “Bananas”.
In this step, we select the table where the data is located, and tell Excel to search in the left-most column for the information we selected in the previous step.
For example, in this case, we highlight the whole table from column A to column C. Excel will look for the information we told it to look up in column A.
In this step, we need to tell Excel which column contains the data that we want to have as an output from the VLOOKUP. To do this, Excel needs a number that corresponds to the column number in the table.
In our example, the output data is located in the 3rd column of the table, so we enter the number “3” in the formula.
This final step is to tell Excel if you’re looking for an exact or approximate match by entering “True” or “False” in the formula.
In our VLOOKUP example, we want an exact match (“Bananas”), so we type “FALSE” in the formula. If we instead used “TRUE” as a parameter, we would get an approximate match. Alternatively, if we didn’t make any selection then Excel assumes “TRUE” has been entered.
An approximate match would be useful when looking up an exact figure that might not be contained in the table, for example, if the number 2.9585. In this case, Excel will look for the number closest to 2.9585, even if that specific number is not contained in the dataset. This will help prevent errors in the VLOOKUP formula.
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VLOOKUP formulas are often used in financial modeling and other types of financial analysis to make models more dynamic and incorporate multiple scenarios.
For example, imagine a financial model that included a debt schedule, where the company had three different scenarios for the interest rate: 3.0%, 4.0%, and 5.0%. The VLOOKUP function could look for a chosen scenario: low, medium or high, and output the corresponding interest rate into the financial model.
As you can see in the example above, an analyst can select the Medium scenario and the VLOOKUP will return 4.0%.
Here is an important list of things to remember about the Excel VLOOKUP Function:
This has been a guide to the VLOOKUP function, how to use it, and how it can be incorporated into financial modeling in Excel.
Even though it’s a great function, as mentioned above, we highly recommend using INDEX MATCH instead, as this combination of functions can search in any direction, not just left to right. To learn more, see our guide to INDEX MATCH. Additionally, a few years ago Excel introduced the XLOOKUP function, which is an improvement on VLOOKUP and matches up well with the versatility of INDEX MATCH.
To keep learning and developing your skills, check out these additional CFI resources:
CFI is a global provider of financial modeling courses and of the FMVA Certification. CFI’s mission is to help all professionals improve their technical skills. If you are a student or looking for a career change, the CFI website has many free resources to help you jumpstart your Career in Finance. If you are seeking to improve your technical skills, check out some of our most popular courses. Below are some additional resources for you to further explore:
CFI is a global provider of financial modeling courses and of the FMVA Certification. CFI’s mission is to help all professionals improve their technical skills. If you are a student or looking for a career change, the CFI website has many free resources to help you jumpstart your Career in Finance. If you are seeking to improve your technical skills, check out some of our most popular courses. Below are some additional resources for you to further explore:
Below is a break down of subject weightings in the FMVA® financial analyst program. As you can see there is a heavy focus on financial modeling, finance, Excel, business valuation, budgeting/forecasting, PowerPoint presentations, accounting and business strategy.
A well rounded financial analyst possesses all of the above skills!
CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path.
In order to become a great financial analyst, here are some more questions and answers for you to discover:
CFI is a global provider of financial modeling courses and of the FMVA Certification. CFI’s mission is to help all professionals improve their technical skills. If you are a student or looking for a career change, the CFI website has many free resources to help you jumpstart your Career in Finance. If you are seeking to improve your technical skills, check out some of our most popular courses. Below are some additional resources for you to further explore:
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