Z TEST in Excel

Excel Z TEST Function (Table of Contents)

• Z TEST in Excel
• Z TEST Formula in Excel
• How to Use the Z Test Function in Excel?

Z TEST in Excel

With the help of the Z-Test, we compare the means of two datasets in Excel that are equal or not. In Excel, we have a function for Z-Test named as ZTest, where, as per syntax, we need to have Array and X value (Hypothesized sample mean) and Sigma value (Optional). Mostly X is considered a minimum of 95% of probability for that it can be taken from 0 to 5. Another way of doing Z-Test is from the Data Analysis option from the Data menu tab. There we would need 2 variable ranges, 2 variances of each range. If Z < Z Critical then we will reject the null hypothesis.

Z TEST Formula in Excel

Below is the Z TEST Formula:

Z TEST Formula has the below arguments:

• Array: The given set of values for which the hypothesized sample mean is to be tested.
• X: The hypothesized sample mean which is required to test.
• Sigma: This is an optional argument which represents the population standard deviation. If it’s not given, or unknown then use the sample standard deviation.

How to Use the Z Test Function in Excel?

There are two ways to use Z TEST in excel, which are:

• One sample Z TEST
• Two sample Z TEST

Here we will cover both ways one by one in detail.

One sample Z TEST:

If we have given one dataset, then we use the Z TEST function, which falls under the statistical functions category. This Z TEST function in excel gives the one-tailed probability value of a test.

Z TEST function:

This function gives you the probability that the supplied hypothesized sample mean is greater than the mean of the supplied data values.

Z TEST Function is very simple and easy to use.

Working of Z TEST Function in Excel with Examples

Let’s understand the working of the Z TEST Function in Excel with some example.

Example #1

We have given the below set of values:

To calculate the one-tailed probability value of a Z Test for the above data, let’s assume the hypothesized population mean is 5, now we will use the Z TEST formula as shown below:

The result is given below:

We can also calculate the two-tailed probability of a Z TEST here by using the above result.

The formula is given below for calculating the two-tailed P-value of a Z TEST for the given hypothesized population, which is 5.

The result is given below:

Two Sample Z Test:

While using the Z Test, we test a null hypothesis that states that the two population’s mean is equal.

i.e.

H₀: µ_{1 –} µ ₂ = 0

H₁: µ_{1 –} µ ₂ ≠ 0

Where H1 is called an alternative hypothesis, the mean of two populations is not equal.

Let’s take an example to understand the usage of two sample Z Test.

Example #2

Let’s take the example of student’s marks of two different subjects.

Now we need to calculate the variance of both subjects so that we will use the below formula for this:

The above formula applies for Variance 1 (Subject 1) like below:

The result is given below:

The above same formula applies for Variance 2 (Subject 2) like below:

The result is given below:

• Now, Go to the Data Analysis tab in the extreme upper right corner under the DATA tab as shown in below screenshot:

• It will open a dialog box Data Analysis options.
• Click on z-Test: Two-Sample for Means and click on OK as shown below.

• It will open a dialog box for Z-test, as shown below.

• Now in the Variable 1 range box, select subject 1 range from A25:A35

• Similarly, in the Variable 2 range box, select subject 2 range from B25:B35

• Under Variable 1 variance box, enter cell B38 variance value.
• Under the Variable 2 variance box,enter cell B39 variance value.

• In Output Range, Select the cell where you want to see the result. Here we have passed cell E24 and then click on OK.

The result is shown below:

Explanation

• If z < -z Critical two tail or z stat > z Critical two-tail, so we can reject the null hypothesis.
• Here 1.279 > -1.9599 and 1.279 < 1.9599 hence we can’t reject the null hypothesis.
• Thus, the means of both populations don’t differ significantly.

Things to Remember

Z test is only applicable for two samples when the variance of both the population is known. While using the Z Test function below error occurs:

• #VALUE! error: If the value of x or Sigma is non-numeric.
• #NUM! error: If the Sigma argument value is equal to zero.
• #N/A error: If the dataset values or passed array is empty.
• #DIV/0! error: This error occurs in two conditions:

1. If the given array contains only one value.
2. The sigma is not given, and the standard deviation is zero of the passed array.

Recommended Articles

This has been a guide to Z TEST in Excel. Here we discuss the Z TEST Formula and how to use the Z TEST Function in Excel along with practical examples and downloadable excel templates. You can also go through our other suggested articles –

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