What is the SYD Function (Sum of Years Digits)?
The SYD Function is a Financial functionFunctionsThe SYD Function is a Financial function. SYD is short for sum of years digits. The function helps in calculating the depreciation of an asset, specifically the sum-of-years' digits depreciation for a specified period in the lifetime of an asset. Sum-of-years digits depreciation is a popular method in calculating the. SYD is short for sum of years digits. The function helps in calculating the depreciation of an asset, specifically the sum-of-years’ digits depreciation for a specified period in the lifetime of an asset.
Sum-of-years’ digits depreciation is a popular method in calculating the accelerated depreciation of an asset. The formula is as follows:
Where:
- Cost is the initial cost of the asset (at start of period 1)
- Salvage is the final value of the asset at the end of its lifetime
- Life is the number of periods over which the depreciation occurs
- Per is the period for which the depreciation is being calculated
The SYD function is helpful to 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 when building financial models or creating a fixed asset depreciation schedule for analysis.
Sum of Years Digits (SYD) Formula
=SYD(cost, salvage, life, per)
The function uses the following arguments:
- Cost (required argument) – It is the initial cost of the asset.
- Salvage (required argument) – It is the value of the asset at the end of the depreciation. It can be zero. It is also known as the salvage value.
- Life (required argument) – It is the useful life of the asset or the number of periods for which the asset will be depreciated.
- Per (required argument) – It is the period for which we want to calculate the depreciation.
How to use the SYD Function in Excel?
To understand the uses of the SYD function, let us consider an example:
Example
Suppose we want to calculate the depreciation for an asset with an initial cost of $300,000 and a salvage value of $5,000 after 10 years.
We need to calculate the depreciation over five years. The formula for calculating the depreciation amount will be:
We get the result below:
For the subsequent years, we will change the per argument.
So for the second year, the formula would be =SYD(D5,D6,D7,2). For the third year, the formula would be =SYD(E5,E6,E7,3).
The result we get is shown below:
Things to remember about the SYD Function
- We need to provide the arguments life and per in the same units of time: days, months, or years.
- #VALUE! error – Occurs when the given arguments are non-numeric.
- #NUM! error – Occurs when:
- The salvage argument provided is less than zero.
- The life or per argument given is less than or equal to zero.
- The per argument provided is greater than the life argument provided in the formula.
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