How are the Android Market ratings (stars) calculated?

I was looking at the reviews for an application which was rated as 3.5 stars in the summary. From reading the reviews, there were few 5's a lot of 1's and very little in between. My "gorilla math" estimate is of the 50 or so reviews I read, it was probably averaged a 2.75 or lower. How is this rating calculated? All reviews in history? Most recent? Some kind of bad review filter I cannot see?