I believe I have quite a simple problem, but want clarification on whether it is the best method to use.
Say I have have insurance line, and the net income (£) from this business for 2011, 2012, 2013 is 1,000,000; 4,500,000; and 5,000,000 respectively.
Hence, the percentage increase from 11-12 is 350%, and from 12-13 is 11.1%.
Now, the average of these is 180.5%, which is a representation of the average percentage increase across all years, but it has been suggested to me to instead represent the data by a “weighted” average.
I am curious… would the weights be the difference in income from each year?
i.e. Weighted Avg. = $((3.5)*350\% + (0.5)*11.1\%)/4 = 307\%$
or would the weights possibly the values themselves? Or maybe there is another option? Maybe a standard average is sufficient?
Thanks very much for your inputs.