The Average Stock Formula (also known as the Weighted Average Cost of Capital) is a calculation that helps businesses determine their cost of capital on investments. It’s an important factor for any business that wishes to remain financially stable and secure its future growth. To calculate the average stock formula, one needs to take the weighted average of the cost of capital, which takes into account all sources of funds available to the company—from debt to equity. This figure is then divided by the total amount of capital employed in the business. By consistently using this formula, companies can be sure they are investing their resources wisely.