Excel Guides

Determining a Simple Moving Average in Excel

A moving average is a calculation to analyze data points by creating a series of averages from different subsets of the full data set. It is often used to smooth out short-term fluctuations in data in order to better observe long-term trends. Moving averages can be calculated for data sets that are actual values or for data sets that are percentages. There are three steps involved in calculating a moving average:

  1. Determine the number of data points to include in the moving average.
  2. Add up the values of the selected data points.
  3. Divide the sum by the number of data points.

The number of data points you use in your moving average will depend on how smooth you want your final trend line to be. A larger number of data points will result in a smoother trend line, while a smaller number of data points will result in a less smooth trend line. In Excel, you can use the AVERAGE function to calculate a simple moving average. The syntax for this function is as follows:

=AVERAGE(number1,number2,...)

For example, if you wanted to calculate a moving average for the last 3 months of sales data, your function would look like this:

=AVERAGE(B2:B4)

Where B2:B4 is the range of cells containing your sales data for the last 3 months.

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