# How to Allow Circular Reference in Excel?

If you’re an Excel user, you’re probably familiar with the dreaded circular reference error. It’s the one that pops up when the cells that you’re referencing in a formula are also being used in the calculation. This can be a frustrating problem to deal with, but fear not – there are ways to allow circular references in Excel! In this guide, we’ll discuss how to troubleshoot and fix circular reference errors in Excel, so you can use them to make more complex calculations. Let’s get started!

**To allow circular reference in Excel, follow the steps below:**

- Open the spreadsheet in Excel.
- Go to the ‘Formulas’ tab at the top of the window.
- Within the ribbon, click on ‘Calculation Options’.
- Choose ‘Enable Iterative Calculation’ from the drop-down menu.
- Set the ‘Maximum Iterations’ and ‘Maximum Change’ for the calculation.
- Click ‘OK’.
- The spreadsheet should now be able to support circular references.

## What is a Circular Reference in Excel?

A circular reference in Excel occurs when a formula in a cell refers back to itself. For example, if a cell contains the formula =A1, then that cell is said to have a circular reference. Circular references are usually unintended, but can be useful in some cases.

Circular references can cause problems in Excel, as the formulas can cause an infinite loop and can lead to inaccurate results. It is therefore important to be aware of when a circular reference is created, and how to prevent them from happening.

## Why Allow Circular Reference in Excel?

Circular references can be useful in certain scenarios. For example, if you need to calculate the number of days between two dates, you may use a formula such as =B1-A1. If you then need to calculate the number of months, you can use the same formula in a different cell, and multiply the result by 30. This is a valid use of a circular reference, and Excel will allow you to do this.

Another example of when a circular reference could be useful is in loan payments. If you need to calculate the total amount of a loan, you can use a formula such as =A1+B1+C1, where A1 is the principal, B1 is the interest rate and C1 is the number of payments. If you need to calculate the total amount of interest paid on the loan, you can use the same formula in a different cell and multiply the result by the number of payments. This is another valid use of a circular reference.

## How to Allow Circular Reference in Excel?

In order to allow a circular reference in Excel, you need to enable the ‘iterative calculations’ feature. To do this, go to the ‘Formulas’ tab and select ‘Calculation Options’. From there, select ‘Enable iterative calculation’ and enter the maximum number of times the formula should be calculated. Once you have done this, Excel will allow you to use a circular reference.

### Understand the Circular Reference

It is important to understand the effect of using a circular reference in Excel. As mentioned above, using a circular reference can lead to inaccurate results and can cause an infinite loop. It is therefore important to be aware of when a circular reference is created, and how to prevent them from happening.

It is also important to remember that enabling the ‘iterative calculations’ feature can have an effect on the performance of Excel. If you are using a large number of formulas that contain circular references, it is recommended that you reduce the number of iterations to improve performance.

### Consider Alternative Solutions

Before enabling the ‘iterative calculations’ feature, it is worth considering if there are any alternative solutions to your problem. For example, if you are using a circular reference to calculate the total amount of a loan, you may be able to use a single formula such as =A1+B1+C1 instead. This would be much more efficient than using a circular reference, and would also be more accurate.

### Test the Results

Once you have enabled the ‘iterative calculations’ feature and used a circular reference, it is important to test the results. Make sure that the results are accurate and that the formula is not causing an infinite loop. If the results are not as expected, it is worth considering if there are any alternative solutions to your problem.

### Conclusion

Circular references can be useful in certain scenarios, but it is important to understand their effect and to consider alternative solutions. If you do decide to use a circular reference, make sure to enable the ‘iterative calculations’ feature and to test the results.

## Top 6 Frequently Asked Questions

### What is a Circular Reference in Excel?

A circular reference in Excel is a type of formula that refers back to itself, either directly or indirectly. This creates a loop in the calculation sequence and can cause problems with accuracy of results.

### What are the Benefits of Allowing Circular References in Excel?

Allowing circular references in Excel can be beneficial in certain situations. For example, complex financial models often require circular references in order to accurately calculate the expected return of an investment. Circular references can also be useful in forecasting models where the output of one calculation is used as an input to another calculation.

### How Can I Allow Circular References in Excel?

You can allow circular references in Excel by enabling the Iterative Calculation option. This can be done by going to File > Options > Formulas and checking the “Enable iterative calculation” box.

### What Are the Risks of Allowing Circular References in Excel?

The main risk associated with allowing circular references in Excel is the potential for inaccurate results due to the loop created in the calculation sequence. It is important to ensure that the circular reference is necessary and that the results are accurate before relying on the results of the calculation.

### How Can I Avoid Circular References in Excel?

The best way to avoid circular references in Excel is to use the “Insert Function” feature to help create the formula. This will ensure that the formula is written correctly and that there is no loop in the calculation sequence.

### What Are the Alternatives to Circular References in Excel?

If you are looking for an alternative to circular references in Excel, the best option is to use array formulas. Array formulas are a powerful tool that can be used to calculate complex results without the need for a circular reference. They can be used to calculate the results of multiple cells at once and are more efficient than using a traditional formula.

### Circular Reference – Fixing Circular Reference in Excel 2013

In conclusion, allowing circular references in Excel can be a great way to make use of data that is constantly changing. By understanding how to use the circular reference feature in Excel, you can save yourself time and effort when trying to keep track of data. With a little bit of practice, you can become an expert in using circular references and make the most out of your data.