WHAT is the POISSON.DIST Function?
The POISSON.DIST function is categorized under Statistical functionsFunctions. It will calculate the Poisson probability mass 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, POISSON.DIST is useful in forecasting revenue. Also, we can use it to predict the number of events occurring over a specific time, i.e., the number of cars arriving at the mall parking per minute.
The POISSON.DIST function was introduced in MS Excel 2010 and hence not available in earlier versions. For older versions of MS Excel, we can use the POISSON function.
Formula
=POISSON.DIST(x,mean,cumulative)
The POISSON.DIST function uses the following arguments:
- X (required argument) – It is the number of events for which we want to calculate the probability. The value must be greater than or equal to 0.
- Mean (required argument) – It is the expected number of events. The argument must be greater than or equal to zero.
- Cumulative (required argument) – It is the logical argument that specifies the type of distribution to be calculated. It can either be:
- TRUE – It returns the cumulative Poisson probability that the number of random events occurring will be between zero and x inclusive.
- FALSE – It returns the Poisson probability mass function that the number of events occurring will be exactly x.
The Poisson probability mass function calculates the probability that there will be exactly x occurrences and is given by the formula:
Where λ is the expected number of occurrences within the specified time period.
The cumulative Poisson distribution function calculates the probability that there will be at most x occurrences and is given by the formula:
How to use the POISSON.DIST Function in Excel?
To understand the uses of the POISSON.DIST function, let’s consider an example:
Example
Suppose we are given the following data:
- Number of events: 5
- Expected mean: 10
To find out the Cumulative Poisson probability, we will use the following formula:
We get the result below:
To find out the Poisson probability mass function, we will use the following formula:
We get the result below:
Few notes about the POISSON.DIST Function
- #NUM! error – Occurs if either:
- The given value of x is less than zero; or
- The given value of mean is less than zero.
- #VALUE! error – Occurs when any of the argument provided is non-numeric.
- If size is not an integer, it is truncated.
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