[tazz306]

I am doing an assignment for school and can not compute the weighted average of these common sharesl 64,000 shares are outstanding, they are in use for 7 months. What is the weighted average and how do I figure it out?

[morgaine300]

That information seems a little weird.

A weighted average is basically averaging all twelve months. To figure an average, you always add the things up and divide by the total you had. So you could just add up all 12 months and divide by 12.

Doing a "weighted average" is essentially a short-cut method of doing that. i.e. instead of adding each month separately, you multiply each share amount by how many months it existed.

So if you had 100,000 shares for 2 months, and 120,000 shares for 10 months, then:

2 months x 100,000= 200,000
10 months x 120,000 = 1,200,000
12 months ----------- 1,400,000 total shares

This would be the same is if I'd done 100,000 + 100,000 + 120,000 + 120,000, etc. We call it weighted average cause the 120,000 "weights" more cause we had it for more months.

So 1,400,000/12 = 116,667 average over the 12 months

What I don't get is why you only have 7 months. If it's a new company that started 5 months into the year, I wouldn't think you'd want to mess with the other 5 months. (For anything popping into my head at the moment, can't think when using zero for 5 months and averaging that in would work.) So do you know what happened to the 5 months?

[tazz306]

64,000 shares outstanding on Aug.1
Treasurey stock purchase on Sept. 1 4,000
Issued new shares Aug. 1 20,000
3-for-1 split on Oct.1 160,000
Outstanding shares on Dec. 31 240,000