Excel uses formulas to perform calculations, which are written as mathematical problems. To create a formula, you should always begin by typing the equals (=) sign in the cell. Then you list the numbers or cells to use in the formula, along with the operation to be performed.

1. The first character is always the equal "=" sign. The equal sign tells Excel that the succeeding characters constitute a formula.
   
2. The second element is the cell reference of values you wish to include in the formula. 
   
3. The third key element is the operator such as addition or subtraction. Operators specify the type of calculation you want to perform on the elements of the formula. 
   

The Formula Bar always displays the formula while the cell displays the results.