Operator precedence in Excel dictates the order in which calculations within a formula are performed. It's crucial to understand this concept to ensure your formulas produce the expected results.

Here's how operator precedence works:

1. Defined Order: Excel has a predefined order for different types of operators. Some operators take precedence over others, meaning they are evaluated first.
2. Grouping by Order: The operators are grouped according to their precedence level, from highest to lowest. Here's the breakdown:
- Highest Precedence:
- Exponentiation (^) - This is calculated first (e.g., 2^3 = 8).
- Next Level:
- Negation (-) applied to a number (e.g., -5).
- Percentage (%) - This converts a number to a percentage before other calculations (e.g., 10% = 0.1).
- Equal Precedence:
- Multiplication (*) and Division (/). These are performed from left to right within the expression (e.g., 2 * 3 / 1 = 6).
- Lowest Precedence:
- Addition (+) and Subtraction (-). These are also evaluated from left to right (e.g., 1 + 2 - 3 = 0).
3. Left to Right Evaluation: Within the same precedence level (e.g., multiplication and division or addition and subtraction), Excel evaluates from left to right.

Examples:

- Without Parentheses: Consider the formula `10 - 2 * 3`. Following the order, Excel first performs the multiplication (2 * 3 = 6) and then subtracts 6 from 10, resulting in 4.
- With Parentheses: If you use parentheses to change the order, the formula `(10 - 2) * 3` becomes `8 * 3`, resulting in 24. The calculation inside the parentheses (10 - 2) happens first, and then the result is multiplied by 3.

Tips:

- Use parentheses liberally to explicitly define the order of operations in your formulas, especially when combining multiple operators with different precedence levels.
- If your formula gets complex, break it down into smaller, easier-to-understand steps using additional cells or parentheses.
- Excel will sometimes highlight a formula with a potential error due to incorrect operator precedence. Pay attention to these warnings and use the formula checker tool (located on the Formulas tab) to diagnose and fix any issues.

By understanding operator precedence, you can write accurate and efficient formulas in Excel, ensuring your calculations produce the desired results.