A weighted average is simply a method of determining the mean of a set of data in which certain points occur multiple times or in which certain points are valued more highly than others. Though the method of determining weights may vary, weighted averages are used in the calculation of a variety of technical indicators and financial metrics.
The earnings per share (EPS) metric, for example, is a method of corporate valuation used by analysts to determine the profitability of a potential investment. It is calculated by dividing the company's earnings for a given period by the number of common shares outstanding. Assume a company has 150,000 outstanding shares at the beginning of the year but buys back half of them in September, leaving only 75,000 at the end of the year. Neither of these figures accurately reflects the number of shares outstanding for the entire year, so the weighted average is calculated to determine how many shares to use in the computation of the EPS value for that period.
To calculate this weighted average using Microsoft Excel, first input the two values for the number of shares outstanding into adjacent cells. In January, there were 150,000 shares, so this value is entered into cell B2. In September, half of these shares were repurchased by the company, reducing the number of outstanding shares to 75,000. Enter this value into cell B3. In the next row, input the number of months for which these values held true. The initial number of shares was maintained from January to September, or nine months, meaning there were only 75,000 shares outstanding for the remaining three months of the year. These values can be put into cells C2 and C3, respectively. In cell D2, input the formula =C2/12 and copy the formula into cell D3 to render the respective weights of each of the values in row B. Finally, in cell E2, input the formula =(B2*D2)+(B3*D3) to render the weighted average. In this example, the weights are calculated as 0.75 and 0.25, respectively, and the weighted average number of shares outstanding is 131,250.

What is the difference between weighted average shares outstanding and basic weighted ...
Outstanding shares refers to stock that is currently held by investors, including shares held by the public, and restricted ... Read Answer >> 
What is the weighted average of outstanding shares? How is it calculated?
The weighted average of outstanding shares is a calculation that incorporates any changes in the amount of outstanding shares ... Read Answer >> 
How do I calculate the expected return of my portfolio in Excel?
Find out how to calculate the total expected annual return of your portfolio in Microsoft Excel using the value and return ... Read Answer >> 
How do I calculate a price to sales ratio using Excel?
Learn what the price to sales ratio is, how to calculate the ratio using a formula, and how to calculate the price to sales ... Read Answer >> 
What's the difference between moving average and weighted moving average?
Moving averages are one of the most popular tools used by active traders to measure momentum. In this FAQ, we'll take a look ... Read Answer >> 
What is the formula for calculating earnings per share (EPS) in Excel?
Understand the basics of the earnings per share ratio and how this important financial metric is calculated in Excel and ... Read Answer >>

Investing
The Weighted Average Of Outstanding Shares
The quantity of a companyâ€™s outstanding shares changes when it issues new shares, repurchases or retires existing ones, or converts others. 
Investing
S&P 500 ETFs: Market Weight Vs. Equal Weight (RSP, SPY)
Both S&P 500 and S&P 500 EWI indexes include the same set of stocks, but different weighting strategies give them separate individual properties. 
Managing Wealth
Weighted Average Cost Of Capital (WACC)
Weighted average cost of capital may be hard to calculate, but it's a solid way to measure investment quality 
Investing
Choosing The Right ETF Index To Reach Your Goals
The key to choosing ETFs for your portfolio is understanding how they pick stocks and making sure their investment philosophy matches yours. 
Trading
Weighted Moving Averages: The Basics
We take a closer look at the linearly weighted moving average and the exponentially smoothed moving average. 
Insights
The Consumer Price Index
Find out how this economic measure can help you make key financial decisions. 
Investing
Time to Sell Weight Watchers After 103% YeartoDate Gain?
Shares of Weight Watchers surged as a successful turnaround gained momentum. Is there more room to run? 
Investing
What are Issued Shares?
Issued shares are the amount of authorized stocks a companyâ€™s shareholders buy and own. The annual report shows the number of outstanding shares.

Weighted Average
An average in which each quantity to be averaged is assigned ... 
Portfolio Weight
The percentage composition of a particular holding in a portfolio. ... 
Weighted
A mathematical process by which figures and/or components are ... 
Earnings Per Share  EPS
Earnings per share (EPS) is the portion of a company's profit ... 
Value Change
An adjustment made to a stock's price to reflect the number of ... 
Financial Modeling
The process by which a firm constructs a financial representation ...