How to use NORM.DIST Function in Excel

NORMDIST stands for “Normal Distribution”. NORMDIST in excel is an inbuilt function which is used to calculate the normal distribution for the given mean and given standard deviation in a certain data set, it is used in statistics, this function takes four arguments, the first being the X value and mean and standard deviation as the second and third and cumulative value as the last argument.

Syntax:= NORM.DIST(x,mean,standard_dev,cumulative)

The NORM.DIST function syntax has the following arguments:

  • X     Required. The value for which you want the distribution.
  • Mean     Required. The arithmetic mean of the distribution.
  • Standard_dev     Required. The standard deviation of the distribution.
  • Cumulative     Required. A logical value that determines the form of the function. If cumulative is TRUE, NORM.DIST returns the cumulative distribution function; if FALSE, it returns the probability density function.

Example: Let’s look at some Excel NORM.DIST function examples and explore how to use the NORM.DIST function as a worksheet function in Microsoft Excel:

Example 1:

NORM.DIST Function - How to use NORM.DIST Function in Excel

I have a stock price data of one of the company. Their stipulated stock price is 1200, the overall average stock price is 1000 and the SD value is 160.

We need to show the probability of stock price that is slotting at 1200.

Syntax:  =NORM.DIST(B1,B2,B3,1)

X we have chosen the initial stock price and for mean we have taken overall average price and for SD we have considered B3 cell value and we have used TRUE (1) as for distribution type.

Result: 0.894350226

NORM.DIST Function in Excel 1 - How to use NORM.DIST Function in Excel

The result is 0.894350226 that means 89.4% of the stock price plotting in this range.

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If I change the distribution type to the normal distribution (FALSE – 0) we will get the below result.

NORM.DIST Function 1 - How to use NORM.DIST Function in Excel

Syntax:  =NORM.DIST(B1,B2,B3,0)

Result: 0.001141557

This means 0.114% of the stock price in this range.

Note:

  1. NORM.DIST replaces the NORMDIST function.
  2. The NORM.DIST() function refers to any normal distribution, whereas the NORMSDIST() compatibility function and the NORM.S.DIST() consistency function refer specifically to the unit normal distribution.
  3. #NUM! error – Occurs if the given standard_dev argument is less than or equal to zero.
  4. #VALUE! error – Occurs when any of the given arguments is non-numeric or is a non-logical value.
  5. The equation for the normal density function (cumulative = FALSE) is:
    NORM.DIST Function in Excel - How to use NORM.DIST Function in Excel
  6. When cumulative = TRUE, the formula is the integral from negative infinity to x of the given formula.

 

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