A running total, or cumulative sum, is a sequence of partial sums of any given data set. A running total is used to display a summary of data as it grows over time. This very common technique is used daily by students and professionals tasked with using Excel to compute and calculate an array of complex data and equations.
While this calculation may sound a tad complex, it is actually a rather common concept that many of us come into contact with regularly, regardless of whether we are the ones using it. Here are some of the uses for a running total:
If you work in the sales sector, you are likely exposed to various running totals. For instance, if you have a quota, you may be using a running total to keep track of your progress until your quota has been reached. This is also true in other industries such as telecommunications or banking, where the number of sales, new clients, and products sold can relate to job performance.
Managers can use these running totals to evaluate this performance monthly, quarterly or yearly. These running totals can also determine real performance against targets over time. This data can then be used to troubleshoot what is required to change when targets are not met.
Another common use of running totals is the method a company uses to keep track of inventory. Companies must record the number of items sold and compare that number to how many items they have in stock, so this is an example of a running total. For instance, if you have 1,000 cookies in stock at the beginning of the week, every sale would be subtracted from the overall stock and result in a new total after each transaction.
Your bank statement gives you an itemized list of what is being deposited and paid out every month. After each transaction, you get a new total. When you go online to view your account, you will see your running total.
Watch the video to see the new total (cumulative total) after each transaction and the formula for calculating it.
^ This article is for business owners and professionals who want to learn how to create a running total in Microsoft Excel.
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