Average vs Weighted Average

Average and weighted average are two different terms in excel, average is a method to calculate the central point of a given data set and it is calculated the traditional way of calculating average of adding the numbers divided the number of data set present, whereas weighted average is an average which is calculated on the same way but with a weight multiplied with each data set.

Difference Between Average vs Weighted Average

The average vs weighted average is a mathematical and statistics term in finance and business, but both are calculated differently. The average is the sum of all individual observations divided by the number of observations. Average used to find the middle value in a particular data set. It is also known as a central tendency, and it is used to find the central tendencyCentral TendencyCentral Tendency is a statistical measure that displays the centre point of the entire Data Distribution & you can find it using 3 different measures, i.e., Mean, Median, & Mode.read more of a group of data in a specific group of data. The weighted average is used in the field of accounting. And its primary purpose is to find the right weight or value to solve. The weighted average is the value of the principal repayment of certain bonds or loans until the principal value is paid.

What is Average?

The average is the sum of all individual observations divided by the number of observations. It is used to find middle value in a particular data set. It is also known as a central tendency, and it is used to find the central tendency of a group of data in a specific group of data. It is mainly used for the representation of data. It can be solved for a set of data by using the arithmetic formula.

Average formula = Sum of Observation / Number of Observation

Example of Average

Let us see an example to understand the average.

Suppose there are ten students in class with marks 50, 60, 70, 80, 65, 78, 95, 63, 58, 91 respectively out of 100. Now let us find the average for the above marks of a student as we know.

Average formula  = Sum of Observation / Number of Observation

Sum of Observation = 50 + 60 + 70 + 80 + 65 + 78 + 95 + 63 + 58 + 91

average

So, the average of the class of 10 students is 71.

Average vs Weighted Average

You are free to use this image on your website, templates etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Average vs Weighted Average (wallstreetmojo.com)

What is the Weighted Average?

The weighted average is used in the field of accounting. The main purpose of it is to find the right weight or value to solve. The weighted average is the value of the principal repayment of certain bonds or loans until the principal value is paid. The weighted average is also a type of average with the small difference as all observation does not carry equal weights; different observation carries different importance; each observation is multiplied by the weight and added up. Weight average is used to perform. It can be taken as an average in which every value has a different weight. And it is influenced by the weight of data value.  The weighted value is the sum of the product of observation into weight divided by the sum of weight and can be written as:-

Weighted Average  Formula  = (a1w1 + a2w2 + a3w3 + …+ anwn) / (w1 + w2 + w3 … +wn)

Example of Weighted Average

Let us see an example to understand it better.

Suppose there are three different exams which contribute to give final marks for a year. There is the different weight of each exam for first exam weight was 15%, for second exam weight was 25% and for final exam weight was 60% now let assume a student has scored 60 marks in the first exam, 70 in the second exam and 80 in the final exam out of 100, now let us calculate final marks of a student.

Use the above-mentioned formula for its calculation.

average.1
  • So, the weighted average of a student is 74.5.

Average vs Weighted Average Infographics

Here we provide you with the top 5 differences.

Average-vs-Weighted-Average-info

You are free to use this image on your website, templates etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Average vs Weighted Average (wallstreetmojo.com)

Average vs Weighted Average – Key Differences

The key differences between this Average are as follows –

  • The average is the sum of all individual observations divided by the number of observations. In contrast, the weighted average is observation multiplied by the weight and added to find a solution.
  • An average is a mathematical equation, whereas the weighted average is applied in the daily activities of finance.
  • The average is the representation of a set of data, whereas the weighted average needs to evaluate to arrive at the solution of a problem.
  • Average can be solved for the set of data by using the arithmetic formula. The weighted average component is given the weight of value to arrive at a specific answer.

Average vs Weighted Average Head to Head Difference

Let’s now look at the head to head differences.

Basis Average Weighted Average
Definition It is the sum of all individual observations divided by the number of observations. It is observation multiplied by the weight and added up to find a solution.
Equation It is a mathematical equation. It is applied in the daily activities of finance.
Solution It is a representation of a set of data.  It needs to evaluate to arrive at the solution of a problem.
Calculations It can be solved for a set of data by using the arithmetic formula. The component is given the weight of value to arrive in a specific answer.

Conclusion

So, we have seen average vs weighted average and have seen the difference between the two. We have seen that the average is the sum of all individual observations divided by the number of observation and Average can be solved for a set of a data by using arithmetic formula whereas the weighted average is observation multiplied by a weight and added up to find a solution and the weighted average component are given weight of value to arrive in a specific answer. Both have different users based on the problem, and both are computed differently. The main purpose of the weighted average is to find the right weight or value to solve. The weighted average is the average value of the principal repayment of certain bonds or loans until a principal value is paid. And average is used to find the median value or average value.

This has been a guide to the Average vs Weighted Average. Here we discuss the top differences between Average vs Weighted Average along with infographics and a comparison table. You may also have a look at the following articles –

  • 35+ Courses
  • 120+ Hours
  • Full Lifetime Access
  • Certificate of Completion
LEARN MORE >>
Reader Interactions

Leave a Reply

Your email address will not be published. Required fields are marked *