Walks count as an official plate appearance and are used in determining whether a player has met the minimum number of plate appearances needed to be eligible to win the batting title but are not used in calculating a player's batting average.
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No, walks do not factor. They don't count as At Bats and therefore don't affect the batting average. For example: a player is at the plate 4 times; he gets walked twice and has one hit. The two walks don't count as At Bats. He therefore has 1 Hit in 2 AB which, of course, is a .500 BA.