Fact-checked and Reviewed by David Chen, CFA | Expert in Financial Modeling and Data Analysis
Simplify your data analysis with our Weighted Average Calculator Excel module. Whether you are calculating portfolio returns, academic grades, or inventory costs, this tool provides instant accuracy with professional formatting.
Weighted Average Calculator
Calculated Weighted Average:
Weighted Average Calculator Excel Formula
$$W = \frac{\sum_{i=1}^{n} (w_i \cdot x_i)}{\sum_{i=1}^{n} w_i}$$
Source: Investopedia – Weighted Average | CFI Guide
Variables:
- Value (x): The numerical value of the item being averaged (e.g., price, score).
- Weight (w): The relative importance or frequency of the value (e.g., quantity, percentage).
- Σ (w * x): The sum of the products of each value and its corresponding weight.
- Σ w: The total sum of all weights assigned.
Related Calculators
What is Weighted Average Calculator Excel?
A weighted average calculator excel style tool is used to find the average of a set of values where some items contribute more heavily to the final result than others. In standard averages, every number has the same “weight” (1/n). In a weighted average, specific values are given more significance based on their importance or quantity.
This is extremely common in financial modeling where you might calculate the “Weighted Average Cost of Capital” (WACC) or in Excel when using the SUMPRODUCT function combined with the SUM function.
How to Calculate Weighted Average (Example)
- Multiply each value by its assigned weight.
- Add all the results from step 1 together.
- Total all the weights used in the dataset.
- Divide the sum from step 2 by the sum from step 3.
Frequently Asked Questions (FAQ)
How do I calculate a weighted average in Excel? You can use the formula =SUMPRODUCT(values_range, weights_range) / SUM(weights_range).
Can weights be percentages? Yes, weights can be decimals (0.5), percentages (50%), or whole numbers (quantities). The formula works the same way.
What happens if weights equal zero? If the sum of weights is zero, the calculation is mathematically undefined (division by zero error).
Why use weighted average instead of simple average? It provides a more accurate representation of data when items vary in importance, such as stock portfolio returns or student grades.