Inverse Binomial Distribution in Excel
The BINOM.INV function is categorized under Statistical functionsFunctionsThe BINOM.INV function is categorized under Statistical functions. It will calculate the inverse Binomial Distribution in Excel. That is, for a given number of independent trials, the function will return the smallest value of x (the number of successes) for a specified Cumulative Binomial Distribution. It will calculate the inverse Binomial Distribution in Excel. That is, for a given number of independent trials, the function will return the smallest value of x (the number of successes) for a specified Cumulative Binomial Distribution probability. For example, we can use it to calculate the minimum number of tosses of a coin for which there is a 50% chance of at least 10 heads.
As a financial analystFinancial Analyst Job DescriptionSee a real Financial Analyst Job Description including all the skills, experience, and education required to be the successful candidate for the job. Perform financial forecasting, reporting, and operational metrics tracking, analyze financial data, create financial models, BINOM.INV is useful in analyzing the best stocks to invest in. We can use the function to understand how a portfolio will be affected by the addition or removal of stocks.
The BINOM.INV function was introduced in MS Excel 2010 and hence is unavailable in earlier versions.
Formula
=BINOM.INV(trials,probability_s,alpha)
The BINOM.INV function uses the following arguments:
- Trials (required argument) – It is the number of Bernoulli trials. That is, it is the number of independent trials that are to be done. Excel will truncate the value to an integer if we provide it in decimal.
- Probability_s (required argument) – It is the probability of success in a single trial.
- Alpha (required argument) – It is the probability of Cumulative Binomial distribution. It should be between 0 and 1.
To learn more, launch our free Excel crash course now!
How to use Inverse Binomial Distribution in Excel
To understand the uses of the BINOM.INV function, let us consider a few examples:
Example
Suppose we are given the following data:
Based on above information, we will calculate the smallest value for which the cumulative binomial distribution is greater than or equal to a criterion value. The formula to use is:
We get the result below:
So, the minimum number of trials is 3, for which the binomial cumulative distribution is 75%.
Things to remember about Inverse Binomial Distribution in Excel
- The BINOM.INV function is an updated version of the CRITBINOM function, which is available in older versions of Excel.
- #VALUE! error – Occurs when any of the arguments provided is non-numeric.
- #NUM! error – Occurs when:
- The given trial argument is less than zero.
- The probability_s argument provided is less than zero or greater than 1.
- The given alpha argument is less than zero or greater than 1.
Free Excel Course
If you want to learn more about functions and become an expert on them, check our CFI’s Free Excel Crash Course! Go through our step by step instructions and demonstrations on how to become an Excel power user.
Additional resources
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:
- Excel Functions for FinanceExcel for FinanceThis Excel for Finance guide will teach the top 10 formulas and functions you must know to be a great financial analyst in Excel. This guide has examples, screenshots and step by step instructions. In the end, download the free Excel template that includes all the finance functions covered in the tutorial
- Advanced Excel Formulas Course
- Advanced Excel Formulas You Must KnowAdvanced Excel Formulas Must KnowThese advanced Excel formulas are critical to know and will take your financial analysis skills to the next level. Advanced Excel functions you must know. Learn the top 10 Excel formulas every world-class financial analyst uses on a regular basis. These skills will improve your spreadsheet work in any career
- Excel Shortcuts for PC and MacExcel Shortcuts PC MacExcel Shortcuts - List of the most important & common MS Excel shortcuts for PC & Mac users, finance, accounting professions. Keyboard shortcuts speed up your modeling skills and save time. Learn editing, formatting, navigation, ribbon, paste special, data manipulation, formula and cell editing, and other shortucts