📌 Part 1: Introduction
Definition: The TRUNC function is a tool in Excel used to truncate a number to an integer by removing the fractional component.
Purpose: It is often utilized in business and financial calculations where fractional numbers are not desired. For instance, rounding off might not be appropriate when determining quantities, so truncating becomes necessary.
Syntax & Arguments:
Explain the Arguments:
- number: This is the value you want to truncate.
- num_digits (optional): Specifies the precision of the truncation. If omitted, it defaults to zero.
Return Value: Returns a truncated number based on the specified precision.
Remarks: Unlike the ROUND function, TRUNC cuts off the decimal without rounding it.
📌 Part 2: Examples
Example 1: Truncating Sales Data
Purpose: To truncate sales data to whole numbers, aiding in inventory or whole unit sales calculations.
Explanation: When calculating total sales units, working with whole numbers is essential to ensure accurate inventory and sales representation.
Example 2: Truncating Financial Data
Purpose: To truncate financial data for a budget forecast, removing cents.
Explanation: When preparing a budget, businesses might want to disregard cents for simplicity, making the TRUNC function especially useful.
Example 3: Truncating Employee Hours
Purpose: To calculate total hours worked by employees without considering minutes.
Explanation: Truncating to whole numbers can simplify the calculation process when assessing employee hours for pay, especially if paid hourly.
Example 4: Truncating Product Ratings
Purpose: To analyze customer product ratings to the nearest whole number.
Explanation: For a high-level analysis, businesses might want to review ratings without the decimal values for simplicity and clarity.
Example 5: Truncating Monthly Expenses
Purpose: View monthly expenses to the nearest dollar for a quick overview.
Explanation: For a quick financial overview, truncating to whole numbers provides a cleaner, more straightforward view of monthly expenses.
Example 6: Sales Bonus Calculation
Purpose: Determine bonus amounts for salespersons based on sales. If the sales exceed $5000, they get 10% of the truncated sales as a bonus.
|2||$6,230.55||=IF(A2>5000, TRUNC(A2)*0.1, 0)||$623.00|
|3||$4,800.25||=IF(A3>5000, TRUNC(A3)*0.1, 0)||$0.00|
|4||$5,999.99||=IF(A4>5000, TRUNC(A4)*0.1, 0)||$599.00|
Explanation: By truncating the sales amount, you ensure the bonus is calculated on a whole number, avoiding minor discrepancies due to decimals. Only those who’ve made sales over $5000 earn a bonus.
Example 7: Tax Calculation
Purpose: Calculate tax amount based on a truncated selling price and a tax rate.
Explanation: For simplicity, businesses may apply tax on the truncated price of items. This might streamline accounting processes, especially for bulk calculations.
Example 8: Discounts on Bulk Purchases
Purpose: Apply a discount if the number of items bought exceeds 10. Use truncated prices for the discount.
|1||Items Bought||Price||Formula||Discounted Price|
|2||15||$12.40||=IF(A2>10, TRUNC(B2)*0.9, B2)||$11.16|
|3||8||$15.30||=IF(A3>10, TRUNC(B3)*0.9, B3)||$15.30|
|4||12||$20.99||=IF(A4>10, TRUNC(B4)*0.9, B4)||$18.89|
Explanation: Offering discounts on bulk purchases can incentivize customers to buy more. Using the TRUNC function ensures the discount is applied to a rounded-off price.
Example 9: Commission on Sales
Purpose: Calculate commission based on sales. Use truncated sales and the SUM function to determine the total commission.
Explanation: Sales commissions are a significant expense for businesses. Businesses can simplify commission calculations by truncating the sales amount before applying the commission percentage.
Example 10: Rented Days for Equipment
Purpose: Calculate rental charges for equipment. If the equipment is rented for more than half a day (over 12 hours), charge for a full day using the truncated hours.
Explanation: Equipment rental businesses might charge based on a full-hour system. Thus, truncating the hours ensures accurate and streamlined billing.
Example 11: Product Quality Rating
Purpose: Assign a rating based on quality scores. If the truncated quality score exceeds 4, rate it as ‘High’; otherwise, it is ‘Low’.
|2||3.8||=IF(TRUNC(A2)>4, “High”, “Low”)||Low|
|3||4.1||=IF(TRUNC(A3)>4, “High”, “Low”)||High|
|4||4.9||=IF(TRUNC(A4)>4, “High”, “Low”)||High|
Explanation: Quality scores can sometimes be fractional. Businesses can simplify product grading and ensure consistent quality standards by truncating and evaluating.
Example 12: Budget Approval
Purpose: Approve budgets only if the truncated proposed budget exceeds the allocated budget.
|1||Allocated Budget||Proposed Budget||Formula|
|2||$10,000||$10,500.75||=IF(TRUNC(B2)<=A2, “Approved”, “Denied”)|
|3||$7,000||$6,999.99||=IF(TRUNC(B3)<=A3, “Approved”, “Denied”)|
|4||$5,000||$5,000.01||=IF(TRUNC(B4)<=A4, “Approved”, “Denied”)|
Explanation: Budget approvals are crucial for controlling expenses. Businesses can make quick approval decisions by truncating the proposed budget and comparing it with the allocated budget, ensuring financial discipline.
📌 Part 3: Tips and Tricks
- 🌟 While TRUNC removes decimals, remember that it doesn’t round numbers. For rounding numbers, consider using the ROUND function.
- 🌟 If you only want to truncate all numbers to whole numbers, you can skip the num_digits argument entirely.
- 🌟 TRUNC can also work with negative numbers, making it versatile for various business applications.
- 🌟 Combining TRUNC with other Excel functions can make your data analysis even more robust!