FINV Function

Today we’re going to talk about the FINV function in Google Sheets. This function is a great tool for anyone working with statistical analysis or financial modeling, as it allows you to find the inverse of a given probability. In other words, if you know the probability of an event occurring, the FINV function can help you find the corresponding value of the function that resulted in that probability.

This can be especially useful when working with probability distributions or when trying to understand the likelihood of certain outcomes occurring. So, let’s dive in and learn more about how to use the FINV function in Google Sheets!

Definition of FINV Function

The FINV function in Google Sheets is a statistical function that allows you to find the inverse of a given probability for a specified distribution. It takes three arguments: the probability for which you want to find the inverse, the distribution’s expected value, and the distribution’s standard deviation. The function returns the value at which the cumulative distribution function (CDF) for the specified distribution equals the probability provided as the first argument. This can be useful for finding the value that corresponds to a specific probability when working with probability distributions or for understanding the likelihood of certain outcomes occurring.

Syntax of FINV Function

The syntax of the FINV function in Google Sheets is as follows:

=FINV(probability, expected_value, standard_deviation)

Where:

• probability: This is the probability for which you want to find the inverse. It must be a value between 0 and 1, inclusive.
• expected_value: This is the expected value (also known as the mean or average) of the distribution for which you want to find the inverse probability.
• standard_deviation: This is the standard deviation of the distribution. It must be a positive number.

For example, if you wanted to find the value at which the CDF for a normal distribution equals 0.75, you could use the following formula:

=FINV(0.75, 0, 1)

This would return the value for which the CDF of a normal distribution with a mean of 0 and a standard deviation of 1 equals 0.75.

It’s important to note that the FINV function only works with normal distributions. If you are working with a different distribution, you may need to use a different function or approach.

Examples of FINV Function

Here are three examples of how you can use the FINV function in Google Sheets:

1. Find the value at which the CDF for a normal distribution equals 0.75:
   To find the value at which the CDF for a normal distribution with a mean of 0 and a standard deviation of 1 equals 0.75, you would use the following formula:

   =FINV(0.75, 0, 1)

   This would return the value of 0.67448975019608, which is the value at which the CDF of a normal distribution with a mean of 0 and a standard deviation of 1 equals 0.75.

2. Find the value at which the CDF for a normal distribution equals 0.95:
   To find the value at which the CDF for a normal distribution with a mean of 0 and a standard deviation of 1 equals 0.95, you would use the following formula:

   =FINV(0.95, 0, 1)

   This would return the value of 1.64485362695147, which is the value at which the CDF of a normal distribution with a mean of 0 and a standard deviation of 1 equals 0.95.

3. Find the value at which the CDF for a normal distribution equals 0.999:
   To find the value at which the CDF for a normal distribution with a mean of 0 and a standard deviation of 1 equals 0.999, you would use the following formula:

   =FINV(0.999, 0, 1)

   This would return the value of 3.0902323061678, which is the value at which the CDF of a normal distribution with a mean of 0 and a standard deviation of 1 equals 0.999.

I hope these examples give you a sense of how the FINV function can be used in Google Sheets to find the inverse of a given probability for a normal distribution.

Use Case of FINV Function

Here are three real-life examples of how the FINV function might be used in Google Sheets:

1. Financial analysis: Suppose you are analyzing the performance of a stock and want to understand the likelihood of it reaching a certain price within a certain time frame. You could use the FINV function to find the value at which the CDF of a normal distribution representing the stock’s performance equals the probability of the stock reaching that price within the given time frame.
2. Quality control: Suppose you are working in a manufacturing setting and want to understand the likelihood of a certain number of defects occurring in a batch of products. You could use the FINV function to find the value at which the CDF of a normal distribution representing the number of defects equals the probability of that number of defects occurring.
3. Supply chain management: Suppose you are managing a supply chain and want to understand the likelihood of certain levels of demand occurring over time. You could use the FINV function to find the value at which the CDF of a normal distribution representing the demand equals the probability of that demand occurring.

These are just a few examples of how the FINV function could be used in real-life scenarios, but it is a very flexible and powerful tool that can be applied to many different situations where you need to understand the likelihood of certain outcomes occurring.

Limitations of FINV Function

There are a few limitations to keep in mind when using the FINV function in Google Sheets:

1. The FINV function only works with normal distributions: This means that if you are working with a different distribution, such as a binomial or Poisson distribution, you will need to use a different function or approach.
2. The FINV function requires a probability between 0 and 1: The probability argument must be a value between 0 and 1, inclusive. If you try to use a probability outside of this range, the function will return an error.
3. The FINV function requires a positive standard deviation: The standard deviation argument must be a positive number. If you try to use a negative standard deviation, the function will return an error.
4. The FINV function is not always accurate: Like any statistical function, the FINV function relies on certain assumptions and approximations. As a result, it may not always return perfectly accurate results, especially when working with very small probabilities or large standard deviations.

It’s important to keep these limitations in mind when using the FINV function in Google Sheets to ensure that you are using it correctly and getting the most accurate results possible.

Commonly Used Functions Along With FINV

Here are some commonly used functions that are often used in conjunction with the FINV function in Google Sheets:

1. NORMINV: The NORMINV function returns the inverse of the normal distribution for a given probability. It takes three arguments: the probability, the mean, and the standard deviation. For example, to find the value at which the CDF of a normal distribution with a mean of 0 and a standard deviation of 1 equals 0.75, you could use the following formula:

   =NORMINV(0.75, 0, 1)

   This would return the same result as the FINV function in the first example above.

2. NORMDIST: The NORMDIST function returns the normal distribution for a given value, mean, and standard deviation. It can be used in combination with the FINV function to verify the results of the FINV function or to calculate the probability of a given value occurring. For example, to calculate the probability of the value returned by the FINV function above occurring, you could use the following formula:

   =NORMDIST(0.67448975019608, 0, 1, TRUE)

   This would return the probability of the value returned by the FINV function occurring in a normal distribution with a mean of 0 and a standard deviation of 1.

3. NORMSINV: The NORMSINV function is similar to the NORMINV function, but it uses a different algorithm to calculate the inverse of the normal distribution. It can be used as an alternative to the FINV function when you want to use a different method of calculation.
4. NORMSDIST: The NORMSDIST function is similar to the NORMDIST function, but it uses a different algorithm to calculate the normal distribution. It can be used as an alternative to the NORMDIST function when you want to use a different method of calculation.

These are just a few examples of the functions that are commonly used in conjunction with the FINV function in Google Sheets. By using these functions together, you can perform a wide range of statistical analyses and financial modeling tasks with greater accuracy and precision.

Summary

The FINV function in Google Sheets is a powerful tool for anyone working with statistical analysis or financial modeling. It allows you to find the inverse of a given probability for a normal distribution, giving you the value at which the cumulative distribution function (CDF) for the distribution equals the probability provided as the first argument. This can be especially useful when working with probability distributions or when trying to understand the likelihood of certain outcomes occurring.

The FINV function has a few limitations to keep in mind, including the fact that it only works with normal distributions and requires a probability between 0 and 1 and a positive standard deviation. Despite these limitations, the FINV function is a very flexible and useful tool that can be applied to many different scenarios.

If you’re interested in using the FINV function in your own Google Sheets work, we encourage you to give it a try! Whether you’re analyzing financial data, conducting statistical analyses, or working with probability distributions, the FINV function can be a valuable tool to help you understand the likelihood of different outcomes occurring.