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AVERAGE Function in Excel

Updated on April 24, 2024
Article byWallstreetmojo Team
Reviewed byDheeraj Vaidya, CFA, FRM

What is Average Function in Excel?

The AVERAGE function in Excel calculates the arithmetic mean of the supplied values. Such values can be numbers, percentages or times. In the mean (or average), the sum of all the items is divided by the number of items on the list. Apart from numbers, an average of Boolean values (true and false) can also be found if they are typed directly in the AVERAGE formula.

For example, the formula “=AVERAGE(10,24,35,true,false)” returns 14. The “true” and “false” values are counted as 1 and 0 respectively. So, the mean is (10+24+35+1+0)/5=14.

The purpose of using the AVERAGE function in Excel is to calculate the center or meanArithmetic MeanArithmetic mean denotes the average of all the observations of a data series. It is the aggregate of all the values in a data set divided by the total count of the observations.read more of a list. A mean includes every value of the list in the calculation. As a result, it is impacted by the extreme values or outliers (very small or very big values) of a list. The AVERAGE function is categorized as a Statistical function of Excel.

Syntax of the AVERAGE Function of Excel

The syntax of the AVERAGE function of Excel is shown in the following image:

AVERAGE Formula

The AVERAGE function of Excel accepts the following arguments:

  • Number 1: This is the first number for which the average is to be calculated.
  • Number 2, number 3,…number n: These are the subsequent numbers for which the average is to be calculated.

The numbers can be supplied as direct numbers, named ranges or cell referencesCell ReferencesCell reference in excel is referring the other cells to a cell to use its values or properties. For instance, if we have data in cell A2 and want to use that in cell A1, use =A2 in cell A1, and this will copy the A2 value in A1.read more containing numeric values. The first number is required, while the subsequent numbers are optional. However, for computing an average, at least two numbers are needed.

Note: The output of other Excel functions can also serve as an input to the AVERAGE function. However, such an output must necessarily be a numeric value.

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Video Explanation of AVERAGE Function in Excel

 

Features of the AVERAGE function of Excel

The features of the AVERAGE function of Excel are listed as follows:

  • It can be supplied with a maximum of 255 arguments in a single formula.
  • It ignores the logical values (or Boolean values) if they have been supplied as cell references. However, logical values entered directly in the formula are counted by the function.
  • It counts those cell references that contain numbers formatted as text.
  • It treats the text strings as follows:
    • If the entire range reference consists of a few numbers and some text strings, the average of only the numbers is returned. In this case, the text strings supplied in the range reference are ignored by the function.
    • If the entire range reference consists of text strings, the “#DIV/0!” error is returned by the function.
    • If text strings are entered directly in the formula, it returns the “#VALUE!” error.
  • It excludes the empty cells from the count. But, the cells containing the number zero are counted.
  • It returns an error if the arguments supplied are error values.

Note: To include the zero values and exclude the empty cells from the count, follow the listed steps:

  1. Click “options” from the File tab. The “Excel options” window opens.
  2. Click “advanced” displayed on the left side.
  3. Under “display options for this worksheet,” select the checkbox of “show a zero in cells that have zero value.”

The zero values of cells will be displayed and included in the count by the AVERAGE function of Excel. Deselecting the checkbox in point “c” will hide the zero values and display empty cells in their place.

How to Use the AVERAGE Function of Excel?

The AVERAGE function is one of the most used functions of Excel. It is frequently used in the financial sectorFinancial SectorThe financial sector refers to businesses, firms, banks, and institutions providing financial services and supporting the economy. It encompasses several industries, including banking and investment, consumer finance, mortgage, money markets, real estate, insurance, retail, etc.read more to calculate the average revenue generated by an organization in a specific time period. It is also used to do financial modelingFinancial ModelingFinancial modeling refers to the use of excel-based models to reflect a company's projected financial performance. Such models represent the financial situation by taking into account risks and future assumptions, which are critical for making significant decisions in the future, such as raising capital or valuing a business, and interpreting their impact.read more and analyze datasets.

Let us consider a few examples to understand the working of the AVERAGE function of Excel.

You can download this AVERAGE Function Excel Template here – AVERAGE Function Excel Template

Example #1–Average in Five Different Cases

The following image shows a list of numbers in the range B3:B7. Use the AVERAGE function of Excel to perform the tasks stated within the following cases:

  • Case 1: Calculate the average by supplying a vertical range reference.
  • Case 2: Calculate the average by supplying the numbers directly to the function.
  • Case 3: Calculate the average by supplying the numbers in words. Enclose the text strings within double quotation marks.
  • Case 4: Calculate the average by supplying the references of cells containing the number names.
  • Case 5: Calculate the average by supplying the numbers directly within double quotation marks.

Write a conclusion for each case.

AVERAGE Function Illustration 1

Case 1: Supply a vertical range reference

The steps are listed as follows:

Step 1: Enter the following formula in cell C3.

“=AVERAGE(B3:B7)”

AVERAGE Function Illustration 2

Step 2: Press the “Enter” key. The output in cell C3 is 4. So, the mean of the given numbers is 4. This is shown within a red box in the following image.

AVERAGE Function Illustration 3

Conclusion: For calculating the average, the numbers can be supplied as a range reference. It is also possible to supply cell referencesCell ReferencesCell reference in excel is referring the other cells to a cell to use its values or properties. For instance, if we have data in cell A2 and want to use that in cell A1, use =A2 in cell A1, and this will copy the A2 value in A1.read more of non-adjacent cells.

Simply select the cell or range in order to supply it to the AVERAGE function. Further, ensure that the non-contiguous cells or ranges are separated by commas.

Case 2: Supply the numbers directly to the AVERAGE function

The steps are listed as follows:

Step 1: Enter the following formula in cell C4.

“=AVERAGE(2,3,5,4,6)”

AVERAGE Function Illustration 4

Step 2: Press the “Enter” key. The output is shown in cell C4 of the following image. Hence, the mean is again 4.

Illustration 5

Conclusion: It is possible to supply the numbers directly to the AVERAGE function. One need not enclose such numbers within double quotation marks.

However, when there are too many numbers in the list, it becomes difficult to enter them directly. In such cases, it is easier to supply cell references.

Case 3: Supply the numbers in words

The steps are listed as follows:

Step 1: Enter the following formula in cell C5.

“=AVERAGE(“Two”,”Three”,”Five”,”Four”,”Six”)”

Illustration 6

Step 2: Press the “Enter” key. The output in cell C5 is the “#VALUE!” error. This is shown in the following image.

Illustration 7

Conclusion: When the number names are supplied directly to the AVERAGE function, it returns the“#VALUE!” error. This implies that the AVERAGE function does not work with text strings, even if such strings are enclosed within double quotation marks.

Case 4: Supply the references to cells containing the number names

The steps are listed as follows:

Step 1: Write the names of the numbers in the range A3:A7. Next, enter the following formula in cell C6.

“=AVERAGE(A3:A7)”

Illustration 8

Step 2: Press the “Enter” key. The output in cell C6 is the “#DIV/0!” error. This is shown in the following image.

Illustration 9

Conclusion: If number names are supplied as cell references, the AVERAGE function returns the “#DIV/0!” error. This implies that whether text strings are supplied directly or as cell references, the AVERAGE function does not work with them.

Notice the green triangles appearing on the top-left corner of cells C5 and C6. These triangles indicate that there is an error in the formulas of these cells.

Note: To include the text strings supplied as cell references, use the AVERAGEA function of Excel. This function counts such text strings as zero and ignores the empty cells. However, the text strings entered directly in the AVERAGEA formula can cause errors.

Case 5: Supply the numbers directly within double quotation marks

The steps are listed as follows:

Step 1: Enter the following formula in cell C7.

“=AVERAGE(“2”,“3”,“5”,“4”,“6”)”

Illustration 10

Step 2: Press the “Enter” key. The output in cell C7 is 4. Hence, the mean is 4. This is shown within a red box in the following image.

Illustration 11

Conclusion: If numbers are supplied directly within double quotation marks, the AVERAGE function returns their average (or mean). Hence, whether numbers are supplied as cell references or direct values (with or without double quotation marks), the AVERAGE function returns their mean.

Example #2–Average by Supplying a Horizontal Range Reference

The following image shows the names (column C), IDs (column B), and scores (in five subjects in columns D to H) of 20 students of a class. Given that the maximum marks of each subject are 100, calculate the average score obtained by each student.

Use the AVERAGE function of Excel.

Example 1

The steps to calculate the average are listed as follows:

Step 1: Enter the following formula in cell I4.

“=AVERAGE(D4:H4)”

So, we have supplied the cell references of row 4 to the AVERAGE function of Excel.

AVERAGE Function Example 1-1

Step 2: Press the “Enter” key. The output in cell I4 is 79.4. Hence, the average score of the student Ashwin is 79.4.

Example 1-2

Step 3: Drag the formula of cell I4 till cell I23. For dragging, use the excel fill handleExcel Fill HandleThe fill handle in Excel allows you to avoid copying and pasting each value into cells and instead use patterns to fill out the information. This tiny cross is a versatile tool in the Excel suite that can be used for data entry, data transformation, and many other applications.read more appearing at the bottom-right side of cell I4.

The outputs are shown in the following image. The formula bar shows the formula of the currently selected cell (I23).

Example 1-3

Example #3–Average and Maximum Average Revenue by AVERAGE, LOOKUP, and MAX Functions

The following image shows the monthly revenuesRevenuesRevenue is the amount of money that a business can earn in its normal course of business by selling its goods and services. In the case of the federal government, it refers to the total amount of income generated from taxes, which remains unfiltered from any deductions.read more (in $ in columns C to F) generated by an organization from four zones, namely, east, west, central, and north-south. We want to perform the listed tasks:

  1. Calculate the average revenue for each month.
  2. Calculate the average revenue for each zone.
  3. Find the zone with the maximum average revenue.

Use the AVERAGE function of Excel for tasks “a” and “b.” For task “c,” use the LOOKUP and MAX functions. Further, explain the formula used for task “c.”

AVERAGE Function Example 2

a. The steps to calculate the average revenue for each month are listed as follows:

Step 1: Enter the following formula in cell C18.

“=AVERAGE(C4:F4)”

Since the average for each row of the dataset needs to be calculated, we have supplied the range reference of row 4.

AVERAGE Function Example 2-1

Step 2: Press the “Enter” key to obtain the output. This is shown in cell C18 of the following image. So, the average revenue for January is $105,000.

AVERAGE Function Example 2-2

Step 3: Drag the formula of cell C18 till cell C29 with the help of the fill handle. The average revenues for all the months are shown in the following image. In this image, the formula bar displays the formula of the currently active cell (C29).

AVERAGE Function Example 2-3

b. The steps to calculate the average revenue for each zone are listed as follows:

Step 1: Enter the following formula in cell G18.

“=AVERAGE(C4:C15)”

This time we supply the cell references of column C in the AVERAGE formula. This is because the average for the entire column needs to be calculated.

AVERAGE Function Example 2-4

Step 2: Press the “Enter” key. The output of cell G18 is shown in the following image. Likewise, we have entered the following formulas in cells G19, G20, and G21 respectively:

• “=AVERAGE(D4:D15)”
• “=AVERAGE(E4:E15)”
• “=AVERAGE(F4:F15)”

Hence, the averages for each zone have been calculated in the range G18:G21.

Example 2-5

c. The steps to find the zone with the maximum average revenue are listed as follows:

Step 1: Enter the following formula in cell H18.

“=LOOKUP(MAX(G18:G21),G18:G21,F18:F21)”

This is shown in the following image.

Example 2-6

Step 2: Press the “Enter” key. The output is shown in the following image. Hence, the average revenue of the west zone is maximum.

Example 2-7

Explanation of the formula: In the formula of step 1, we have used the vector form of the LOOKUP function. This formula works as follows:

  1. The MAX functionMAX FunctionThe MAX Formula in Excel is used to calculate the maximum value from a set of data/array. It counts numbers but ignores empty cells, text, the logical values TRUE and FALSE, and text values.read more looks for the maximum number of the range G18:G21. The output of the MAX function is 100000. This output becomes the “lookup_value” of the LOOKUP function.
  2. Next, the LOOKUP functionLOOKUP FunctionThe LOOKUP excel function searches a value in a range (single row or single column) and returns a corresponding match from the same position of another range (single row or single column). The corresponding match is a piece of information associated with the value being searched. read more searches the number 100000 (lookup_value) in the range G18:G21 (lookup_vector). It returns the result from the range F18:F21 (result_vector). So, the given “lookup_value” corresponds with the west zone.

Hence, the output of the formula of step 1 is “west zone.”

Note: The LOOKUP function searches for a value (lookup_value) in a one-row or one-column range (lookup_vector) and returns a corresponding match from the same position of another range (result_vector). The MAX function returns the maximum number from a dataset of numeric values.

For the syntax of the LOOKUP and MAX functions, click the hyperlinks of points “b” and “a” respectively.

Example #4–Average of Top Four Scores by AVERAGE and LARGE Functions

The following image shows the names (column B) and scores (columns C to G) of 16 students in five subjects. We want to perform the listed tasks:

  1. Calculate the average of five scores of the student Lini (row 4). Use the AVERAGE function of Excel.
  2. Calculate the average of the top four scores of each student. Use the AVERAGE and LARGE functions of Excel.

Explain the formula used for task “b.”

AVERAGE Formula Excel Example 3

a. The steps to calculate the average of the five scores of row 4 are listed as follows:

Step 1: Enter the following formula in cell H4.

“=AVERAGE(C4:G4)”

AVERAGE Formula Excel Example 3-1

Step 2: Press the “Enter” key. The output is 79.8, as shown in the following image. Hence, Lini’s average of five scores is 79.8.

Note: To find the average (of five scores) for all the students, simply drag the formula of cell H4 till cell H19. For dragging, use the fill handle at the bottom-right corner of cell H4.

AVERAGE Formula Excel Example 3-2

b. The steps to calculate the average of the top four scores of each student are listed as follows:

Step 1: Enter the following formula in cell H4.

“=AVERAGE(LARGE(C4:G4,{1,2,3,4}))”

AVERAGE Formula Excel Example 3-3

Step 2: Press the “Enter” key. The output is shown in cell H4 of the following image. Hence, Lini’s average of the top four scores is 83.

AVERAGE Formula Excel Example 3-4

Step 3: Drag the formula of cell H4 till cell H19. The outputs for all rows are shown in the following image. Notice that all these outputs are the averages of the top four scores of each student.

AVERAGE Formula Excel Example 3-5

Explanation of the formula: In the formula of step 1, the inner function (LARGE function) is processed first, followed by the outer function (AVERAGE function). This formula works as follows:

  1. An array of numbers {1,2,3,4} has been supplied to the LARGE functionLARGE FunctionLARGE Function returns the nth largest value from a given set of values. It is a built-in function of Microsoft Excel and is categorized as a Statistical Excel Function. read more. These numbers represent the position from which values will be returned. So, the LARGE function searches for the first highest, second highest, third highest, and fourth highest values in the range C4:G4. As a result, the LARGE function returns an array of numbers, which is {89,89,78,76}.
  2. The array of numbers returned by the LARGE function {89,89,78,76} serves as the argument of the AVERAGE function. The AVERAGE function calculates the average of these numbers, which is (89+89+78+76)/4=83.

Likewise, the average of the top four scores has been obtained for all the students of the range B4:B19.

Note: The LARGE function returns a value from the specified position of the supplied range. This position begins from the highest value of the dataset. So, the number 1 corresponds to the maximum value of the dataset, 2 corresponds to the second highest value, 3 corresponds to the third highest value, and so on.

For the syntax of the LARGE function, click the hyperlink given in point “a” of the preceding explanation.

Example #5–Average of Last Three Numbers by AVERAGE, LOOKUP, LARGE, IF, ISNUMBER, and ROW Functions

The following image shows some numeric and textual values in column B. Calculate the average of the last three numeric values, which are in cells B15, B17, and B18.

Use the AVERAGE, LOOKUP, LARGE, IF, ISNUMBER, and ROW functions of Excel. Further, explain the formula used for the given task.

AVERAGE Formula Excel Example 4

The steps to calculate the average of the last three numeric cells are stated as follows:

Step 1: Enter the following formula in cell C3.

“=AVERAGE(LOOKUP(LARGE(IF(ISNUMBER(B3:B18),ROW(B3:B18)),{1,2,3}),ROW(B3:B18),B3:B18))”

AVERAGE Formula Excel Example 4-1

Step 2: Press the keys “Ctrl+Shift+Enter” together. For Excel for Mac, press the keys “Command+Shift+Enter.”

Once the CSE (Ctrl+Shift+Enter) keys are pressed, the formula is enclosed within curly braces. This is shown in the following image. The output is also shown in cell C3.

Hence, the average of the last three numeric values (110000, 90000, and 50000) is 83333.3.

AVERAGE Formula Excel Example 4-2

Explanation of the formula: The formula of step 1 works as follows:

a. In the formula “ISNUMBER(B3:B18),ROW(B3:B18),” the ROW functionROW FunctionThe row function in Excel is a worksheet function that displays the current row index number of the selected or target cell. The syntax to use this function is as follows: =ROW( Value ).read more returns the row numbers of the range B3:B18. So, the ROW function returns the following array of values:

{3;4;5;6;7;8;9;10;11;12;13;14;15;16;17;18}.

b. The ISNUMBER functionISNUMBER FunctionISNUMBER function in excel is an information function that checks if the referred cell value is numeric or non-numeric.read more processes each value returned by the ROW function. The ISNUMBER function returns “true” if a cell of column B contains a number. It returns “false” if a cell of column B contains a text string. Consequently, the ISNUMBER function returns the following array of logical values:

{TRUE;TRUE;FALSE;TRUE;TRUE;TRUE;TRUE;FALSE;TRUE;TRUE;FALSE;TRUE;TRUE;FALSE;TRUE;TRUE}

c. Next, the IF functionIF FunctionIF function in Excel evaluates whether a given condition is met and returns a value depending on whether the result is “true” or “false”. It is a conditional function of Excel, which returns the result based on the fulfillment or non-fulfillment of the given criteria. read more operates. The “logical_test” of the IF function is “ISNUMBER(B3:B18)” and the “value_if_true” is “ROW(B3:B18).” The “value_if_false” has been omitted. Therefore, the IF function processes each value of the array returned by the ISNUMBER function. The IF function returns the row number for each “true” value and “false” for each “false” value. So, the IF function returns the following array of values:

{3;4;FALSE;6;7;8;9;FALSE;11;12;FALSE;14;15;FALSE;17;18}

d. The LARGE function has been supplied the array {1,2,3} in the formula “LARGE(IF(ISNUMBER(B3:B18),ROW(B3:B18)),{1,2,3}).” So, the LARGE function searches for the first highest, second highest, and third highest values in the array returned by the IF function. The LARGE function returns the following array of three values:

{18,17,15}

e. Next, the LOOKUP function processes the formula “LOOKUP({18,17,15},ROW(B3:B18),B3:B18).” So, the LOOKUP function searches for the values 18, 17, and 15 in the array returned by the formula “ROW(B3:B18).” The array returned by this ROW formula is the same as that of point “a.” Therefore, the LOOKUP function returns a corresponding match of the values 18, 17, and 15 from the range B3:B18. As a result, the following array is returned by the LOOKUP function:

{50000,90000,110000}

f. Finally, the AVERAGE function calculates the mean of the three values returned by the LOOKUP function. It returns 83333.3 [(50000+90000+110000)/3] as the average.

Notice that the formula of step 1 works as an array formula as it has been completed by pressing the CSE (Ctrl+Shift+Enter) keys. Therefore, the LOOKUP function also returns an array of corresponding matches (50000, 90000, and 110000) for the multiple “lookup_values” (18, 17, and 15) supplied to it.

However, the regular LOOKUP function looks for a single “lookup_value” and returns a single corresponding match. Moreover, it is completed by pressing the “Enter” key.

Note 1: The ROW function returns the row numbers of the supplied cell reference. The ISNUMBER function checks whether the supplied value or cell reference is numeric or not. It returns “true” if the supplied value (or reference) is numeric, otherwise it returns “false.”

The IF function checks whether the supplied condition (logical_test) is true or false. If the condition is true, it returns the “value_if_true.” If the condition is false, it returns the “value_if_false.” If the logical test evaluates to false and the “value_if_false” is omitted, the IF function returns “false.”

For the syntax of the ROW, ISNUMBER, and IF functions, click the hyperlinks given in points “a,” “b,” and “c” of the preceding explanation. The definitions of the LOOKUP and LARGE functions are given in the notes at the end of examples #3 and #4 respectively.

Note 2: To view the array returned by each function, follow the listed steps:

  1. Select cell C3 that contains the formula.
  2. Double-click within the selected cell. Alternatively, press the key F2 to enter the Edit mode.
  3. Select that part of the formula whose array needs to be viewed. For instance, to view the array returned by the ISNUMBER function, select “ISNUMBER(B3:B18).”
  4. Press the key F9 once a selection has been made in the preceding step.

To stop editing the formula, press the escape (Esc) key.

Frequently Asked Questions

1. Define the AVERAGE function and suggest how to calculate the average in Excel.

The AVERAGE function of Excel calculates the average of the supplied numeric values. The function can be supplied with either direct numbers or references to cells containing numbers. However, the AVERAGE function does not work with text values.

To calculate the average in Excel, follow either of the listed methods:

• Add the numbers of the list manually. Divide the sum obtained by the number of values of the list.
• Open the AVERAGE formula by typing “=AVERAGE” without the beginning and ending double quotation marks. Supply the numbers (enclosed in parentheses) whose average is to be calculated. Press the “Enter” key.

Note: For the syntax of the AVERAGE function, refer to the heading “syntax of the AVERAGE function of Excel,” which is given after the introduction of this article.

2. Define the different varieties of the AVERAGE function of Excel.

In Excel 2007 and the subsequent versions, the following varieties of the AVERAGE function are available:

a. AVERAGEA function–It calculates the average by including the text values (supplied as cell references), Boolean values (true and false), and numeric values. It ignores the empty cells from the count. If the text values are entered directly in the formula, it results in errors. Supplying error values to the formula also causes errors.
b. AVERAGEIF function–It calculates the average of those cells that meet a particular criterion (condition). The criterion, range against which criterion is evaluated, and the actual range to be averaged are supplied to the function as arguments.
c. AVERAGEIFS function–It calculates the average of those cells that meet particular criteria (conditions). This function can be supplied multiple conditions and multiple ranges against which the conditions are to be evaluated. The actual range to be averaged also needs to be supplied as an argument.

Note: The AVERAGEA function of Excel counts the cell references containing text values as zero. It counts “true” and “false” values as 1 and 0 respectively. The AVERAGEA function counts the Boolean values irrespective of whether they are supplied directly or as cell references.

3. Where is the AVERAGE function on the Excel ribbon and how is it used?

The AVERAGE function is within the AutoSum drop-down of the Home tab (“editing” group) and the Formulas tab (“function library” group). To use this function, follow the listed steps:

a. Select the cell immediately below the cells to be averaged.
b. Click the AVERAGE function from the AutoSum drop-down. The AVERAGE formula automatically appears in Excel.
c. Verify the range of the formula and if correct, press the “Enter” key.

The average for the column is returned.

Note 1: Once the AVERAGE formula appears in the selected cell of Excel, its range can be edited manually, if required.

Note 2: To find an average for a row, select the cell to the immediate right of the cells to be averaged. Next, follow the steps “b” and “c” stated above.

This has been a guide to the AVERAGE function in Excel. Here we explain how to calculate Average using AVERAGE formula in Excel along with examples and downloadable Excel templates. You may also look at these useful functions of Excel–

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