What is the NORM.INV Function?
The NORM.INV Function is categorized under Statistical functionsFunctionsThe NORM.INV function is categorized under Statistical functions. It will calculate the inverse of the normal cumulative distribution for a supplied value of x, and a given distribution mean and standard deviation. The function will calculate the probability to the left of any particular point in a normal. It will calculate the inverse of the normal cumulative distribution for a supplied value of x, and a given distribution mean and standard deviation. The function will calculate the probability to the left of any particular point in a normal distribution.
For example, suppose we are given a normally distributed random variable that is denoted by x. For the value of x, if we wish to get the bottom 5% of the distribution, we can use the NORM.INV function.
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, the function is useful in stock market analysis. We can use NORM.INV to understand how a portfolio is affected by any additions or withdrawals made.
Formula
=NORM.INV(probability,mean,standard_dev)
The NORM.INV formula uses the following arguments:
- Probability (required argument) – It is the probability corresponding to normal distribution. It is the value at which we want to evaluate the inverse function.
- Mean (required argument) – It is the arithmetic mean of distribution
- Standard_dev (required argument) – It is the standard deviation of the distribution.
The normal distribution is a continuous probability function and is given by the formula:
Where:
- μ is the mean of the distribution
- σ^{2 }is the variance
- x is the independent variable for which you want to evaluate the function
How to use the NORM.INV Function in Excel?
The NORM.INV function was introduced in Excel 2010. To understand the uses of the function, let us consider an example:
Example
Suppose we are given the following data:
- Probability: 0.56
- Arithmetic mean of the distribution: 5
- Standard deviation of the distribution: 2
If we wish to calculate the value of the function, the formula to use will be:
We get the result below:
Notes about the NORM.INV Function
- If the mean equals zero and the standard deviation equals 1, NORM.INV uses the standard normal distribution.
- #VALUE! error – Occurs if any of the given arguments is non-numeric.
- #NUM! error – Occurs when:
- The given probability argument is less than zero or greater than one.
- The given standard_dev argument is less than or equal to zero.
Click here to download the sample Excel file
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 modeling and analysis. To learn more, check out these additional resources:
- Excel Finance FunctionsExcel 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 Training
- Advanced Excel Formulas ListAdvanced 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 ShortcutsExcel 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