Rounding to the Nearest Penny in Excel Formula

Rounding is a process of adjusting a number to make it simpler or more accurate, usually by eliminating some of the digits after the decimal point. Rounding can be useful for various purposes, such as simplifying calculations, presenting data in a more readable format, or complying with certain rules or standards.

In this article, we will learn how to round numbers to the nearest penny (or cent) in Excel, using different formulas and functions. We will also explain the basic theory behind rounding, the procedures to follow, and some examples with real data.

A penny is the smallest unit of currency in the United States, Canada, and some other countries. It is equal to one-hundredth of a dollar, or 0.01. To round a number to the nearest penny, we need to look at the third digit after the decimal point, and decide whether to increase or decrease the second digit.

There are different rules or methods for rounding, but the most common one is the following:

• If the third digit is 5 or more, round up the second digit by adding 1 to it, and drop the rest of the digits.
• If the third digit is 4 or less, round down the second digit by keeping it the same, and drop the rest of the digits.

For example, to round 12.345 to the nearest penny, we look at the third digit, which is 5. Since it is 5 or more, we round up the second digit, which is 4, by adding 1 to it, and get 5. Then we drop the rest of the digits, and get 12.35 as the final result.

To round 12.344 to the nearest penny, we look at the third digit, which is 4. Since it is 4 or less, we round down the second digit, which is 4, by keeping it the same, and get 4. Then we drop the rest of the digits, and get 12.34 as the final result.

Procedures

There are several ways to round numbers to the nearest penny in Excel, using different formulas and functions. Here are some of the most common ones:

Using the ROUND function

The ROUND function is a built-in function in Excel that rounds a number to a specified number of digits. The syntax of the function is:

=ROUND (number, num_digits)

where number is the number to be rounded, and num_digits is the number of digits to which the number should be rounded.

To round a number to the nearest penny using the ROUND function, we need to use 2 as the num_digits argument, since we want to keep two digits after the decimal point. For example, to round the number in cell A1 to the nearest penny, we can use the formula:

=ROUND (A1, 2)

This will return the rounded number in the same format as the original number. If we want to format the rounded number as currency, we can apply the currency format to the cell that contains the formula.

Using the MROUND function

The MROUND function is another built-in function in Excel that rounds a number to the nearest multiple of a given number. The syntax of the function is:

=MROUND (number, multiple)

where number is the number to be rounded, and multiple is the multiple to which the number should be rounded.

To round a number to the nearest penny using the MROUND function, we need to use 0.01 as the multiple argument, since we want to round to the nearest multiple of one-hundredth. For example, to round the number in cell A1 to the nearest penny, we can use the formula:

=MROUND (A1, 0.01)

This will return the rounded number in the same format as the original number. If we want to format the rounded number as currency, we can apply the currency format to the cell that contains the formula.

Using the ROUNDUP and ROUNDDOWN functions

The ROUNDUP and ROUNDDOWN functions are two more built-in functions in Excel that round a number up or down to a specified number of digits. The syntax of the functions is:

=ROUNDUP (number, num_digits) =ROUNDDOWN (number, num_digits)

where number is the number to be rounded, and num_digits is the number of digits to which the number should be rounded.

To round a number to the nearest penny using the ROUNDUP or ROUNDDOWN functions, we need to use 2 as the num_digits argument, since we want to keep two digits after the decimal point. For example, to round the number in cell A1 to the nearest penny, we can use either of the formulas:

=ROUNDUP (A1, 2) =ROUNDDOWN (A1, 2)

The difference between the ROUNDUP and ROUNDDOWN functions is that the ROUNDUP function always rounds up the number, regardless of the third digit, while the ROUNDDOWN function always rounds down the number, regardless of the third digit. For example, if the number in cell A1 is 12.345, the ROUNDUP function will return 12.35, while the ROUNDDOWN function will return 12.34.

These functions can be useful if we want to apply a specific rounding direction, rather than the standard rounding rule. However, they may not be consistent with the common practice of rounding to the nearest penny.

Explanation

To illustrate the concepts and procedures explained above, let’s use a real data example. Suppose we have a table of sales data for a company, as shown below:

The table shows the product name, the price per unit, the quantity sold, and the total sales amount for each product. The total sales amount is calculated by multiplying the price and the quantity. The table is in the range A1:E6 in Excel.

We want to round the total sales amount for each product to the nearest penny, using the different formulas and functions discussed above. We also want to format the rounded numbers as currency, with the dollar sign and the comma separator.

To do this, we can follow these steps:

1. In cell F1, enter the label “Rounded Total”.
2. In cell F2, enter the formula =ROUND (E2, 2) to round the total sales amount for product A to the nearest penny using the ROUND function. Press Enter to confirm the formula.
3. Select cell F2 and drag the fill handle down to cell F6 to copy the formula to the rest of the column. This will round the total sales amount for each product to the nearest penny using the ROUND function.
4. Select the range F2:F6 and apply the currency format by clicking the Currency button on the Home tab of the ribbon, or by pressing Ctrl+Shift+$. This will format the rounded numbers as currency, with the dollar sign and the comma separator.
5. In cell G1, enter the label “Rounded Total (MROUND)”.
6. In cell G2, enter the formula =MROUND (E2, 0.01) to round the total sales amount for product A to the nearest penny using the MROUND function. Press Enter to confirm the formula.
7. Select cell G2 and drag the fill handle down to cell G6 to copy the formula to the rest of the column. This will round the total sales amount for each product to the nearest penny using the MROUND function.
8. Select the range G2:G6 and apply the currency format by clicking the Currency button on the Home tab of the ribbon, or by pressing Ctrl+Shift+$. This will format the rounded numbers as currency, with the dollar sign and the comma separator.
9. In cell H1, enter the label “Rounded Total (ROUNDUP)”.
10. In cell H2, enter the formula =ROUNDUP (E2, 2) to round the total sales amount for product A to the nearest penny using the ROUNDUP function. Press Enter to confirm the formula.
11. Select cell H2 and drag the fill handle down to cell H6 to copy the formula to the rest of the column. This will round the total sales amount for each product to the nearest penny using the ROUNDUP function.
12. Select the range H2:H6 and apply the currency format by clicking the Currency button on the Home tab of the ribbon, or by pressing Ctrl+Shift+$. This will format the rounded numbers as currency, with the dollar sign and the comma separator.
13. In cell I1, enter the label “Rounded Total (ROUNDDOWN)”.
14. In cell I2, enter the formula =ROUNDDOWN (E2, 2) to round the total sales amount for product A to the nearest penny using the ROUNDDOWN function. Press Enter to confirm the formula.
15. Select cell I2 and drag the fill handle down to cell I6 to copy the formula to the rest of the column. This will round the total sales amount for each product to the nearest penny using the ROUNDDOWN function.
16. Select the range I2:I6 and apply the currency format by clicking the currency button on the Home tab of the ribbon, or by pressing Ctrl+Shift+$. This will format the rounded numbers as currency, with the dollar sign and the comma separator.

Example

To demonstrate the effect of rounding to the nearest penny on the sales data, let’s create a scenario and an example with real data. Suppose we want to calculate the total sales amount for all the products, and compare the results using different rounding methods.

To do this, we can follow these steps:

1. In cell A8, enter the label “Grand Total”.
2. In cell E8, enter the formula =SUM (E2:E6) to calculate the total sales amount for all the products without rounding. Press Enter to confirm the formula.
3. In cell F8, enter the formula =SUM (F2:F6) to calculate the total sales amount for all the products using the ROUND function. Press Enter to confirm the formula.
4. In cell G8, enter the formula =SUM (G2:G6) to calculate the total sales amount for all the products using the MROUND function. Press Enter to confirm the formula.
5. In cell H8, enter the formula =SUM (H2:H6) to calculate the total sales amount for all the products using the ROUNDUP function. Press Enter to confirm the formula.
6. In cell I8, enter the formula =SUM (I2:I6) to calculate the total sales amount for all the products using the ROUNDDOWN function. Press Enter to confirm the formula.
7. Select the range E8:I8 and apply the currency format by clicking the Currency button on the Home tab of the ribbon, or by pressing Ctrl+Shift+$. This will format the numbers as currency, with the dollar sign and the comma separator.

The final table should look like this:

We can see that the total sales amount for all the products is $702.31, and it does not change when we round it to the nearest penny using any of the methods. This is because none of the total sales amounts for each product has a third digit after the decimal point that is 5 or more, so the rounding does not affect the second digit.

However, this may not always be the case. If we change the price of product A to 12.345, for example, the total sales amount for product A will change to 61.725, and the total sales amount for all the products will change to 702.335. In this case, the rounding will have an impact on the results, as shown below:

We can see that the total sales amount for all the products is now $702.335, and it changes when we round it to the nearest penny using different methods. The ROUND and ROUNDUP functions will round it up to $702.34, while the MROUND and ROUNDDOWN functions will round it down to $702.33. This is because the third digit after the decimal point is 5, so the rounding will affect the second digit.

Depending on the purpose and the context of the calculation, we may prefer one method over another. For example, if we want to be more conservative and avoid overestimating the sales, we may choose the MROUND or ROUNDDOWN functions. If we want to be more generous and avoid underestimating the sales, we may choose the ROUND or ROUNDUP functions. However, we should also be aware of the possible errors or discrepancies that may arise from rounding, and report them accordingly.

Other Approaches

Besides the formulas and functions discussed above, there are some other approaches to round numbers to the nearest penny in Excel, such as:

• Using the Increase Decimal and Decrease Decimal buttons on the Home tab of the ribbon, or by pressing Ctrl+Shift+< and Ctrl+Shift+> respectively. These buttons can increase or decrease the number of decimal places displayed in a cell, but they do not change the underlying value of the number. Therefore, they are only useful for formatting purposes, and not for calculations.
• Using the TRUNC function to truncate a number to a specified number of digits. The syntax of the function is:

=TRUNC (number, num_digits)

where number is the number to be truncated, and num_digits is the number of digits to which the number should be truncated.

To truncate a number to the nearest penny using the TRUNC function, we need to use 2 as the num_digits argument, since we want to keep two digits after the decimal point. For example, to truncate the number in cell A1 to the nearest penny, we can use the formula:

=TRUNC (A1, 2)

This will return the truncated number in the same format as the original number. If we want to format the truncated number as currency, we can apply the currency format to the cell that contains the formula.

The TRUNC function is similar to the ROUNDDOWN function, except that it always truncates the number, regardless of the third digit. For example, if the number in cell A1 is 12.345, the TRUNC function will return 12.34, while the ROUNDDOWN function will return 12.35.

The TRUNC function can be useful if we want to apply a specific truncation direction, rather than the standard rounding rule. However, it may not be consistent with the common practice of rounding to the nearest penny.