An XLSM file is a spreadsheet file created by Microsoft Excel, a popular spreadsheet program. The 'XLSM' extension signifies that the workbook contains macros. Macros are small programs written in VBA (Visual Basic for Applications) that automate tasks within Excel. These macros can range from simple formatting changes to complex data analysis and manipulation. Because XLSM files can contain executable code, they pose a potential security risk if opened from untrusted sources. Excel will typically display a warning message when opening an XLSM file, prompting the user to enable or disable macros. Disabling macros prevents the code from running, mitigating the risk of malicious code execution. XLSM files are based on the Open XML format, which uses a combination of XML and ZIP compression to store data efficiently. They are widely used in business and finance for tasks such as budgeting, forecasting, data analysis, and reporting.