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Average Formula

By Madhuri ThakurMadhuri Thakur

Home » Finance » Blog » Finance Formula » Average Formula

Average Formula

Average Formula (Table of Contents)

  • Formula
  • Examples
  • Calculator

What is Average Formula?

An average is a term we used to hear in the statistics and mathematician the statistics average called Mean. Average play a very important role in the statistics if anyone wants to know the central value from available data they can use function average. In excel also we can easily find out average or mean according to our needs. An average is a statistics term, in a simple term we can say an average is a single number taken as representative of the list available. An average is used by many researchers at the time of doing research, But mainly average used by technical analyst because they have to calculate the average price of particular stock in which they are doing research, so they average having more importance in their field. An average is a middle number in the data.

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The formula for Average –

Average = Total Sum of All Numbers / Number of Item in the Set

Examples of Average Formula (With Excel Template)

Let’s take an example to understand the calculation of Average Formula in a better manner.

You can download this Average Excel Template here – Average Excel Template

Average Formula – Example #1

Data available of wages earned by labor in the last 4 weeks as follow. Calculate the Average Wages earned by labor.

Average Formula Example 1-1

Solution:

Sum of all numbers is calculated as:

Sum of all numbers 1

  • Sum of all numbers = 200 + 300 + 400 + 700 + 450 + 3000
  • Sum of all numbers = 2350 

An average is calculated using the formula given below

Average = Total Sum of All Numbers / Number of Item in the Set

Calculation of Average Example 1

  • Average = 2350 / 6
  • Average = 391.67

Average Formula – Example #2

Data are available for the month of sales of ice-cream. From the available data Calculate the Average sale of ice cream.

Average Formula Example 2-1

Solution:

Sum of all numbers is calculated as:

Sum of all numbers 2

  • Sum of all numbers = 1200 + 1300 + 1500 + 1400 + 1250
  • Sum of all numbers = 6650

An average is calculated using the formula given below

Average = Total Sum of All Numbers / Number of Item in the Set

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Calculation of Average Example 2

  • Average = 6650 / 5
  • Average = 1330

Average Formula – Example #3

Raymond is a textile company and every year the company manufacturing 100000 different types of cloth and selling to the dealer. So the company wants to know average monthly sales. From the available data Calculate the Average Sales.

Average Formula Example 3-1

Solution:

Sum of all numbers is calculated as:

Sum of all numbers 3

  • Sum of all numbers = 17000 + 14000 + 15000 + 25000 + 14500 + 14800 + 3800 + 4520
  • Sum of all numbers = 108620

An average is calculated using the formula given below

Average = Total Sum of All Numbers / Number of Item in the Set

Calculation of Average Example 3

  • Average = 108620/ 8
  • Average = 135778

Average Formula – Example #4

Voltas is in the business of manufacturing of A.C and they are having a partnership with Youngster Company limited for selling their product, every month they are selling 25000 quantities to the dealer. So company voltas want to know their total sales because they have to pay dealer commission for selling their product. From the available data Calculate the Average Sales form the company.

Average Formula Example 4-1

Solution:

Sum of all numbers is calculated as:

Sum of all numbers 4

  • Sum of all numbers = 10000 + 12000 + 15000 + 9000 + 14520
  • Sum of all numbers = 60520

An average is calculated using the formula given below

Average = Total Sum of All Numbers / Number of Item in the Set

Calculation of Average Example 4

  • Average = 60520/ 5
  • Average = 12104

Average sales for months is 12104.

Explanation

An average is a central number in the data which is used to answer the many types of question and doubt. Many people used to find out average by divide the sum of the total by two, buts it does not give the correct number. Average formula taking into consideration the total sum of all numbers given in data set and a sum is divided by a total number of items in the series. So Average is used for many ways for knowing the middle value in the data series. In the general term, we calculate average but in the statistics, we calculate the arithmetic mean. Arithmetic means also known as average in the layman language. Average can be calculated for the various purpose, include average sales for the month, Average turnover. It can be calculated by the way of either number, series, data, range.

Relevance and Uses of Average Formula

  • In statistics, the average is used by the researcher for finding.
  • Many company and organization use average to find out their average sales and average manufacturing of the product and average salary and wages paid to labor and employees.
  • WHO (World Health Organisation) also used average to know the yearly death and birth rate during a particular time.
  • An average is one of the most important terms in the field of statistics.
  • Average used by many agencies, basically to know the middle number or data in the available data.
  • An average is a very important tool in the field of Research company to know the average traded price of a particular stock.
  • Average play a very important role in the stock market. Many investors used an average of stock for last year for doing new investment.
  • Many types of department organization and sector used the average as per their requirement and need.
  • Average having relevance in each and every field and sector, especially in the stock market because it is used by analyst frequently.

Average Formula Calculator

You can use the following Average Calculator

Total Sum of all Numbers
No. of Item in the Set
Average Formula
 

Average Formula =
Total Sum of all Numbers =
No. of Item in the Set
0 = 0
0

Recommended Articles

This has been a guide to Average formula. Here we discuss how to calculate Average along with practical examples. We also provide Average calculator with downloadable excel template. You may also look at the following articles to learn more –

  1. How to Calculate Interest Expense?
  2. Formula For Solvency Ratio
  3. Guide to Gordon Growth Model Formula
  4. Calculation of Net Debt Formula

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