In Excel financial models, 3D formulas serve as a powerful tool for consolidating data from multiple worksheets or ranges within the same workbook. These formulas enable users to reference the same cell or range across various sheets, thereby streamlining calculations and improving analysis efficiency.

Understanding Formula Dimensions: 1D, 2D, and 3D

Before delving into the application of 3D formulas, it is essential to understand the distinctions between one-dimensional (1D), two-dimensional (2D), and three-dimensional (3D) formulas.

1D Formulas
In one-dimensional formulas, the components or arguments of the formula are limited to movement along a single direction—either within a row or a column of the calculation block. These formulas are designed to function accurately within the active row. If applied elsewhere, adjustments to the cell references are necessary to maintain accuracy.

2D Formulas
Two-dimensional formulas, on the other hand, adjust their arguments based on their placement within different rows and columns, thus encompassing two dimensions: a row and a column. When creating a 2D block, modelers must pay close attention to anchoring any row and column because the formula, when copied across the entire dataset, could yield incorrect results if improperly anchored. 2D calculation blocks are intended for use in scenarios where different sets of calculations are repeated across rows and columns.

3D Formulas
In three-dimensional formulas, an additional dimension ‘worksheets’ is introduced. This is particularly useful when you need to sum or consolidate data from several sheets that follow the same structure. For example, if you need to sum values in a ‘Summary’ sheet from cell J10 to Z15 across multiple sheets, which may vary in number but share the same format, a 3D formula is ideal.

Applying a 3D SUM Formula

Here are the steps to apply a 3D SUM formula:

1. Create Blank Sheets for Reference
   Start by creating two blank sheets named ‘Start’ and ‘End.’ These sheets will mark the boundaries for your formula.
2. Arrange Reference Sheets
   Place all the sheets you want to reference between the ‘Start’ and ‘End’ sheets. This ensures that any sheets within this range are automatically included in your formula.
3. Apply the Formula
   In the ‘Summary’ sheet, select the cell where you wish to display the consolidated result. Choose the corresponding cell in the ‘Start’ sheet, hold down the Shift key, and then select the same cell in the ‘End’ sheet. Press Enter to execute the formula.
4. Drag the Formula
   The formula will appear as =SUM(Start:End!J10). Drag this formula across the desired range to sum the required cells.

One of the most significant advantages of 3D formulas is that there is no need to adjust the formula when adding or removing reference sheets between the ‘Start’ and ‘End’ sheets. You can simply drop in a new sheet, which will automatically be included in the output, or delete a sheet to exclude it from the results.

Conclusion

• Convenience: A 3D reference is a practical and efficient way to reference multiple worksheets that share the same structure, ensuring that cells with similar data are correctly summarized.
• Efficiency: You can obtain a concise, consolidated summary without the need to reference specific cells from various sheets individually.
• Flexibility: Adding or removing similar worksheets within the formula range is straightforward, making 3D formulas an adaptable tool for dynamic financial models.