📌 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:
=TRUNC(number, [num_digits])
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.
| A | B | C | |
|---|---|---|---|
| 1 | Sales (Units) | Formula | Result |
| 2 | 23.45 | =TRUNC(A2) | 23 |
| 3 | 17.89 | =TRUNC(A3) | 17 |
| 4 | 30.11 | =TRUNC(A4) | 30 |
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.
| A | B | C | |
|---|---|---|---|
| 1 | Projected Income | Formula | Result |
| 2 | $4,523.67 | =TRUNC(A2) | $4,523 |
| 3 | $3,212.49 | =TRUNC(A3) | $3,212 |
| 4 | $6,700.15 | =TRUNC(A4) | $6,700 |
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.
| A | B | C | |
|---|---|---|---|
| 1 | Hours Worked | Formula | Result |
| 2 | 8.5 | =TRUNC(A2) | 8 |
| 3 | 9.75 | =TRUNC(A3) | 9 |
| 4 | 7.33 | =TRUNC(A4) | 7 |
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.
| A | B | C | |
|---|---|---|---|
| 1 | Product Rating | Formula | Result |
| 2 | 4.2 | =TRUNC(A2) | 4 |
| 3 | 3.8 | =TRUNC(A3) | 3 |
| 4 | 4.9 | =TRUNC(A4) | 4 |
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.
| A | B | C | |
|---|---|---|---|
| 1 | Monthly Expense | Formula | Result |
| 2 | $1,235.67 | =TRUNC(A2) | $1,235 |
| 3 | $812.45 | =TRUNC(A3) | $812 |
| 4 | $2,500.99 | =TRUNC(A4) | $2,500 |
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.
| A | B | C | |
|---|---|---|---|
| 1 | Sales | Formula | 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.
| A | B | C | |
|---|---|---|---|
| 1 | Price | Formula | Tax |
| 2 | $120.75 | =TRUNC(A2)*0.07 | $8.40 |
| 3 | $250.50 | =TRUNC(A3)*0.07 | $17.50 |
| 4 | $99.99 | =TRUNC(A4)*0.07 | $6.93 |
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.
| A | B | C | D | |
|---|---|---|---|---|
| 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.
| A | B | C | |
|---|---|---|---|
| 1 | Sales | Formula | Commission |
| 2 | $300.50 | =TRUNC(A2)*0.05 | $15.00 |
| 3 | $400.75 | =TRUNC(A3)*0.05 | $20.00 |
| 4 | $500.99 | =TRUNC(A4)*0.05 | $25.00 |
| 5 | Total Commission | =SUM(C2:C4) | $60.00 |
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.
| A | B | C | |
|---|---|---|---|
| 1 | Hours Rented | Formula | Charge |
| 2 | 8.5 | =TRUNC(A2)*10 | $80.00 |
| 3 | 15.3 | =TRUNC(A3)*10 | $150.00 |
| 4 | 10.9 | =TRUNC(A4)*10 | $100.00 |
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’.
| A | B | C | |
|---|---|---|---|
| 1 | Quality Score | Formula | Rating |
| 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.
| A | B | C | |
|---|---|---|---|
| 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!