Average vs Weighted Average

Difference Between Average vs Weighted Average

The average vs weighted average is mathematical and statistics term in finance and in business but both are calculated differently. The average is the sum of all individual observations divided by the number of observation. Basically average used to find middle value in a particular data set. It is also known as central tendency and it is used to find the central tendency of a group of data in a certain group of data. The weighted average is used in the field of accounting. And its main purpose is to find the right weight or value to solve. The weight average is the value of the principal repayment of certain bond or loan until the principal value is paid.

What is Average?

The average is the sum of all individual observations divided by the number of observation. Basically, it is used to find middle value in a particular data set. It is also known as central tendency and it is used to find the central tendency of a group of data in a certain 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 10 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 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

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

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 weight average is the value of the principal repayment of certain bond or loan until the principal value is paid. The weight 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 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 and there is 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 final exam out of 100, now let us calculate final marks of student.

Use the above-mentioned formula for its calculation.

• 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 – 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 observation whereas the weighted average is observation multiplied by the weight and added up to find a solution.
• An average is a mathematical equation whereas the weight average is applied in daily activities of finance.
• The average is the representation of a set of data whereas the weight average needs to evaluate to arrive at the solution of a problem.
• Average can be solved for the set of data by using arithmetic formula and the weighted average component are given the weight of value to arrive in a certain 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 observation.		It is observation multiplied by the weight and added up to find a solution.
Equation		It is a mathematical equation.		It is applied in 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 certain 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 set of a data by using arithmetic formula whereas the weighted average is observation multiplied by weight and added up to find solution and the weighted average component are given weight of value to arrive in a certain answer. Both have different users based on problem and both are computed differently. The main purpose of the weighted average is to find the right weight or value to solve. The weight average is the average value of the principal repayment of certain bond or loan until a principal value is paid. And average is used to find median value or average value.

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