What is the NORMINV Function?
The NORMINV Function is categorized under Statistical functionsFunctionsThe NORMINV Function is categorized under Statistical functions. It will calculate the inverse of the normal cumulative distribution for the specified mean and standard deviation. 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 10% of. It will calculate the inverse of the normal cumulative distribution for the specified mean and standard deviation.
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 10% of the distribution, we can use the NORMINV 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, NORMINV is useful in stock market analysis. We can use the function to understand how a portfolio is affected by any additions or withdrawals made.
Formula
=NORMINV(probability,mean,standard_dev)
The NORMINV formula uses the following arguments:
- Probability (required argument) – It is the probability corresponding to the normal distribution. It is the value at which we want to evaluate the inverse function.
- Mean (required argument) – It is the arithmetic mean of the 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 we want to evaluate the function.
How to use the NORMINV Function in Excel?
To understand the uses of the NORMINV function, let’s consider an example:
Example
Suppose we are given the following data:
- Probability: 65
- Arithmetic mean of the distribution: 2
- Standard deviation of the distribution: 1
If we wish to calculate the value of the function, the formula will be:
We get the result below:
Things to remember about the NORMINV Function
- In MS Excel 2010, the NORMINV function was replaced by the NORM.INV function. The function is still available in Excel 2010 and is stored in the list of compatibility functions to allow compatibility with earlier versions of the application.
- NORMINV uses an iterative search technique. If the search fails to converge after 100 iterations, the function will return the #N/A error value.
- #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 1.
- 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 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