How to Calculate Weighted Average Shares
The weighted average volume of stock is a simple calculation, but an important one for calculating profits per share or measuring the efficiency of large stock purchases. Use a spreadsheet for accumulating and calculating the necessary data. A popular version of the weighted moving average is the volume weighted average price.
Other People Are Reading
Instructions
-
-
1
Collect the volume and price data for the beginning and ending period you wish to measure. For example, if you want the weighted average shares for 2000, collect the first through the last day of trading and average the results after adjusting for additional shares or stock splits or buybacks, or collect the data on a daily, weekly, quarterly or semiannual basis.
-
2
Compute a weighted average calculation for a stock. Accumulate specific historical prices using a stock subscription service or a free historical database (see Resources). Multiply and input the stock price into column 1 of the spreadsheet. In column 2, input the volume. Multiply column 1 by column 2 and input the results in column 3. The result is the weighted average stock price for that period.
-
-
3
Assume a stock with 50,000 shares outstanding trades at 50 on January 1. On July 30, the stock issues 100,000 shares while trading at 60. The weighted average of the stock is .5 (half a year) times 50,000, or 25,000, plus .5 times 150,000, or 75,000. The weighted number of shares is 75,000.
-
4
Using the same example in Step 4, the price weighted average is .33 times 50 (the 50,000 shares are 1/3 of the outstanding shares) and .67 (the remaining average shares) times 60. The price weighted average value is 56.7.
-
5
Use a spreadsheet and daily data to compose a volume weighted average shares outstanding. Use the instruction above to compute the price weighted average value. Multiply the result by the daily stock volume. Add the results for a week or month (or other period as necessary) and divide the result by the total number of shares traded for the period. The result represents a price where most stock is traded. This result is used by mutual fund traders to see how efficiently they bought or sold stock relative to all the shares traded in the period.
-
1
Tips & Warnings
Weighted average stock computations are used for option calculations (see Resources) and volume weighted calculations for technical stock charting.
References
Resources
- Photo Credit chart background image by Stasys Eidiejus from Fotolia.com
