CHISQ.INV Function
Calculates the inverse of the left-tailed probability of the chi-square distribution
Calculates the inverse of the left-tailed probability of the chi-square distribution
The CHISQ.INV Function is categorized under Statistical functions. It will calculate the inverse of the left-tailed probability of the chi-square distribution.
In financial analysis, the function can be useful in finding out the variations in assumptions made. For example, we use a precision machine that produces balls for a high-quality ball bearing with a diameter of precisely 2000 μm (2 mm). Assuming that the machines generally produce balls of that size on average mean, but individual balls can vary slightly in either direction following a normal distribution.
Depending on production conditions such as the raw material supplied, humidity factor, etc., production will vary that some machines produce balls distributed around the target of 3000 μm, while others produce balls with a wider distribution. Therefore, the variance parameter of the normal distribution of the ball sizes varies from machine to machine. Using CHISQ, we can model the variance of a particular machine.
=CHISQ.INV(probability,deg_freedom)
The CHISQ.INV function uses the following arguments:
To learn more, launch our free Excel crash course now!
To understand the uses of the CHISQ.INV function, let us consider an example:
Suppose we are given the following data:
The formula for calculating the inverse of the left-tailed probability of the chi-squared distribution is shown below:
We get the result below:
So, the inverse of the left-tailed probability of the chi-squared distribution is 0.71335.
CFI is the official provider of the FMVA Financial Modeling Certification, designed to transform anyone into a world-class financial analyst.
Thanks for reading CFI’s guide to important Excel functions! By taking the time to learn and master these functions, you’ll significantly speed up your financial analysis. To learn more, check out these additional resources:
To master the art of Excel, check out CFI’s FREE Excel Crash Course, which teaches you how to become an Excel power user. Learn the most important formulas, functions, and shortcuts to become confident in your financial analysis.
Launch CFI’s Free Excel Course now to take your career to the next level and move up the ladder!