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A Formula Field is a type of custom field, whose value is automatically computed by Celoxis based on the formula's logic. It enables users to define complex data manipulations and perform arithmetic, logical or conditional operations, which are all calculated at run-time. 

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Let us say your business practice is to take 10% of the budget as an advance. Instead of manually computing it and changing it every time the budget changes, you would like to define a formula field that will compute it as 10% of the budget. To further complicate the scenario, let us assume that your policy is to take an advance of 10% for projects with budget up to $1000 and 15% above that. This further increases the chances of errors in manually computing this field. This is where formula fields come to the rescue.

You could use a currency field which managers will fill when creating or modifying projects. The problem is that managers must manually calculate the advance from the budget and remember to change it every time the budget changes. This is error prone. To make things a bit more complicated, assume that the policy is to take an advance of 10% for projects with budget up to $1000 and 15% above that. This increases the chances of errors. This is where formula fields come to the rescue. You would create a formula field called say 'Advance amount'. On the same, you will define the formula

${entity.budget <= $1000 1000 ? entity.budget * .10 : entity.budget * .15}

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Formula fields have many benefits :

• The value of this field is auto-calculated from the formula and is not entered by the user, thus avoiding errors. 
• The amount will be automatically updated when the budget changes.
• Most importantly, if the policy changes all you need to do is update the formula. The advance amount for all projects will automatically reflect the new value.

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