When a formula refers back to its own cell, either directly or indirectly, it creates a circular reference. A circular reference can have a significant impact on performance because it can iterate indefinitely. Iteration is the repeated recalculation of a worksheet until a specific numeric condition is met. By default, iterative calculations are turned off in Microsoft Office Excel. You can handle a circular reference by doing one of the following: remove the circular reference or enable iterative calculations.
What do you want to do?
Locate and remove a circular reference
If an error message about creating a circular reference appears while editing a formula, then you probably have created an unintended circular reference. In this case, you can locate and remove the incorrect reference.

On the Formulas tab, in the Formula Auditing group, click the arrow on the Error Checking ingroup button, point to Circular References, and then click the first cell listed in the submenu.
Tip: You can move between cells in a circular reference by doubleclicking the tracer arrows.

Review the formula in the cell. If you cannot determine whether the cell is the cause of the circular reference, click the next cell in the Circular References submenu.
Note: The status bar displays the word "Circular References" followed by a reference to one of the cells contained in the circular reference.

Continue to review and correct the circular reference until the status bar no longer displays the word "Circular References."
Make a circular reference work by changing the number of times that Excel iterates formulas
If you want to keep the circular reference, you can enable iterative calculations but you must determine how many times the formula should recalculate. When you turn on iterative calculations without changing the values for maximum iterations or maximum change, Office Excel stops calculating after 100 iterations or after all values in the circular reference change by less than 0.001 between iterations, whichever comes first. However, you can control the maximum number of iterations and the amount of acceptable change.

Click the Microsoft Office Button , click Excel Options, and then click the Formulas category.

In the Calculation options section, select the Enable iterative calculation check box.

To set the maximum number of times that Office Excel will recalculate, type the number of iterations in the Maximum Iterations box. The higher the number of iterations, the more time that Excel needs to calculate a worksheet.

To set the maximum amount of change you will accept between calculation results, type the amount in the Maximum Change box. The smaller the number, the more accurate the result and the more time that Excel needs to calculate a worksheet.