BUSINESS MATHEMATICS

Fundamental Operations on – Fractions and Decimals

Fractions
It represents a part of a whole or group. It expressed as a quotient of two quantities, namely the numerator and the denominator. The numerator
(the number above the fraction bar) indicates the number of parts taken from the whole. The denominator (the number below the fraction bar) specifies
the number of equal parts the whole is divided into. The two whole numbers is separated by the fraction bar specifically called vinculum that indicates
the operation of division.

Kinds of Fraction
Proper Fraction is a fraction whose numerator is less than the denominator. This fraction has a value less than 1. The following are example of proper
fractions:
1, 6 , 12 , 31
4 13 35 49
Improper Fraction is a fraction whose numerator is greater than or equal to the denominator. This fraction has a value greater than or equal 1. The
following are example of improper fractions:
3, 14 , 37 , 131
2 3 5 12
Mixed Number is a fraction which consists of a whole number and a proper fraction. The following are example of mixed numbers.
1 2 2 11
12, 43 , 75, 10 12
A fraction is classified as a simple fraction if it has been reduced in its lowest terms. This means that both the numerator and the
denominator cannot be divided evenly by the same number except 1.
1 3 5 9 11 20 5 4
Examples are: 4 , 4, 21, 50, 40 25
÷5 =5

Adding Fractions
To add fractions with the same denominator, add the numerators and write the sum over the common denominator. Then simplify or reduce the
resulting fraction to its lowest term if possible. To simplify or reduce a fraction to its lowest term, divide the numerator and denominator by their
greatest common factor (GCF). The GCF is the greatest factor that can divide two or more numbers. To add fractions with different denominators, write
them first as equivalent fractions by finding the least common multiple of the denominators of the fractions.

Subtracting Fractions
To subtract fractions with the same denominator, subtract the numerators and write the difference over the common denominator. Subtracting
fractions with different denominators follows the same procedure as in adding fractions with different denominators. Write the fractions first as
equivalent fractions by finding the LCD.

Multiplying Fractions
To multiply two fractions, follow these steps:
1. Change the mixed number (if any) to an improper fraction.
 2. Before you multiply, cross cancel (reduce the numerator of one fraction with the denominator of another fraction by dividing both by their
greatest common factor)
3. Multiply the numerators then multiply the denominators.
4. Convert the result (if improper fraction) to a mixed number.
5. Reduce your answer in its simplest or lowest term.

Dividing Fractions
To divide two fractions, follow these steps:
1. Change the mixed number (if any) to an improper fraction.
2. Change the division sign to multiplication sign.
3. Get the reciprocal of the divisor by interchanging its numerator and denominator.
4. If possible, cross cancel before multiplying.
5. Multiply the numerators then multiply the denominators.
6. Convert the result (if improper fraction) to a mixed number.
7. Reduce your answer in its simplest or lowest term.

DECIMALS
Numbers with decimal point and decimal places. A grade of 1.5 is an example of a decimal number which is read as “one and five tenths” or in a
less formal way as “one point five.” Hence, a decimal can also defined as a fraction with unwritten denominator of 10 or some power of 10.

KINDS OF DECIMALS
 Terminating Decimal – is a decimal that ends or terminates. Example of terminating decimals includes 0.25, 0.50, 0.75 and 0.80.
 Non – terminating Decimal – is a decimal number that does not end. Nonterminating decimal are further classified as repeating and nonrepeating
decimals.
a. A repeating, nonterminating decimal has a digit or block of digits repeated in the decimal part. Examples of nonterminating repeating
decimals are 0.3333. . . , 0.121212. . . , and 0.1000.
b. A nonrepeating, nonterminating decimal has no digit or sequence of digits repeated in the decimal part. Examples of which are the
mathematical constant √2 = 1.414213562. . . , π = 3.14159265. . . , and e = 2.718281828. . .

Adding Decimals
Add decimals the same way as you add whole numbers. Write the digits in columns and align the decimal points. For convenience, zeros may be
appended so that numbers may have the same number of places. Then add the digits from the right to left.
Subtracting Decimals
Subtract decimal numbers in the same way as you subtract whole numbers. Write the digits in columns and align the decimal points. Regroup
when a digit in the subtrahend is greater than the digit in the same place value of the minuend.
Multiplying Decimals
Multiply decimals in the same way as you multiply whole numbers. Count the number of the total number of decimal places in the factors. The
number of decimal places in the product should be equal to the total number of decimal places in the factors.
Dividing Decimals
In the case in which the dividend is a decimal, divide decimals as you divide whole numbers. Place the decimal point of the quotient directly above
the decimal point of the dividend and continue the division process. In case the divisor and the dividend are both decimals, move the decimal point of the
divisor to the right until it becomes a whole number. Move also the decimal point of the dividend as many places to the right as it was done in the divisor.
Then divide.

Fundamental Operations on – Percentage Conversion & Word Problems involving Fractions, Decimals and Percents

The Concept of Percent

The word percent is derived from the Latin word per centum which means “per hundred” or “out of 100”. It is generally represented by
45 3.5
the symbol %. Thus, 45% means or 0.45 or 45 parts out of 100 parts, and 3.5% means or 0.035 or 3.5 parts out of 100 parts.
100 100

Fractions, Decimals and Percents

A value or a quantity can be expressed as fraction, a decimal, or a percent. Thus, it is important that you know how to convert a fraction into a
decimal and percent forms and vice versa.

Changing Fractions to Decimal and Percent Forms

To express a fraction as a decimal, divide the numerator by the denominator. The resulting decimal can then be expressed as a percent by
multiplying the decimal by 100 or by moving the decimal point two places to the right and affixing the percent symbol.
3
Example: 4
= 0.75 x 100 = 75%
Converting Decimals to Fraction and Percent Forms
To express terminating decimals as fractions, do the following:
1. Write the decimal over a denominator of 1.
2. Multiply the numerator and denominator by a power of 10 that corresponds to the number of places to the right of the decimal point.
3. Simplify if needed.
Example:
Converting Percents to Fraction and Decimal Forms
To express a percent as a decimal, drop the percent symbol then divide the number by 100 or multiply it by 100 to change it first fraction
in simplest form. Then express the fraction as a decimal.

Finding the Percentage

Percentage is obtained by multiplying a number by a percent. The formula for computing the percentage is
P=BxR
Finding the Base
To find the base, simply divide the percentage by the rate.
𝐏
B=𝐑
Finding the Rate
To find the rate, simply divide the percentage by the base.
𝐏
R=𝐁
where: P is the percentage given as a part of the base or part of the total;
B is the base as the total; and

R is the rate given as a percent or a decimal

 BUSINESS MATHEMATICS

Ratio, Rate, and Proportion

Ratio
A ratio is a comparison of two numbers or quantities. The ratio of a number a to a number b provided that b is not equal to zero can be written as
𝒂
𝒃
𝒐𝒓 𝒂: 𝒃 𝒐𝒓 𝒂 𝒕𝒐 𝒃.
Rate
Rate is a concept that is used often in everyday situations such as when you compare prices of goods with different quantities. You compare items
to determine which one is the better buy.
Rate is a special ratio of two numbers with different units of measurement such as kilometers per hour, words per minute, or price per kilogram.
Proportion
Proportion refers to the statement of the equality of two ratios. If a : b and c : d are two equal ratios, then the proportion can be written as
𝑎 𝑐
a : b = c : d (read as “a is to b as c is to d”) or 𝑏 = 𝑑.
The terms a and d are called the extremes, while the terms b and c, the means.
𝑎 𝑐
In a proportion, the product of the means is equal to the product of the extremes, that is, 𝑏 = 𝑑 is a proportion if and only if ad = bc.

Finding the Missing Term in a Proportion

To find the missing term in a given proportion, apply the rule of proportion, that is, the product of the extremes of a proportion is equal to the
product of its means. Then solve for the missing term algebraically.

Kinds of Proportion

1. Direct Proportion exist when two quantities, x and y, of the proportion vary directly or are in direct variation; that is, if x increases (or decreases),
then y increases (or decreases) also by the same factor or constant.

𝑥1 𝑥2
=
𝑦1 𝑦2

2. Indirect or Inverse Proportion exist when the two quantities, x and y, of the proportion are inversely proportional. It means x varies inversely with
y or x is inversely proportional to y; that is, as x increases, then y decreases.

𝑥1 𝑦2
=
𝑥2 𝑦1

3. Partitive Proportion refers to a kind of proportion where the given total is partitioned or divided into equal or unequal parts depending on the
given ratios.
 BUSINESS MATHEMATICS

Buying and Selling

Mark – on refers to the difference between the original selling price and the cost of an item.

Mark – on or Initial Markup = Selling Price – Cost

Selling Price = Cost + Mark – on or Selling Price = Cost + Mark – up
Cost = Selling Price – Mark – on or Cost = Selling – initial Mark – up

Mark – up is obtained by getting difference of the new selling price and the original selling price. The following formulas may be used:
Mark – up = New Selling Price – Original Selling Price
New Selling Price = Original Selling Price + Mark – up
Original Selling Price = New Selling Price – Mark – up
Mark – up Rate = Mark – up ÷ Original Selling Price
Mark – down is obtained by getting the difference of the original selling price and the new selling price.
Mark – down = Original Selling Price – New Selling Price
Mark – down Rate = Mark – down ÷ Original Selling Price

Mark – up versus Margin

Mark – up is the amount added to the cost of goods to obtain the selling price. It is also a percentage of cost. Margin (also known as gross
margin or gross profit) is defined as selling price minus the cost of goods sold. It is a percentage of sales.

Discount is the amount deducted from the selling price of a product or service.

Types of Discounts

1. Trade Discount is the discount offered by a manufacturer or wholesaler to encourage resellers (customers) to purchase a product. It is usually
stated in a specific amount or percentage discount.
Trade Discount = List Price x Trade Discount Rate
Net Price = List Price – Trade Discount
Net Price = List Price – (List Price x Trade Discount Rate)
Net Price = List Price – (1 – Trade Discount Rate)

2. Cash Discount is the discount given to persuade customers to pay in cash immediately or within a specified time.
Cash Discount = Net Price x Cash Discount Rate
Selling Price = Net Price – Cash Discount
Selling Price = Net Price – (Net Price x Cash Discount Rate)
Selling Price = Net Price (1 – Cash Discount Rate)
Profit and Loss are important concepts in the financial evaluation of a business. They guide managers and entrepreneurs in making critical decisions
about the future of their company or business. You have learned from this module that profit can only be achieved if you can maintain your gross sales to
be greater than your operating expenses. Otherwise, loss will be incurred. To avoid loss, you must keep track of your operating expenses, cost of goods or
services sold, inventory, and the like, and keep them low as much as possible without sacrificing the quality of your goods or services.

Break-even Analysis is a means of determining the break-even point or the point at which the total revenue is equal to the total cost. Break-even analysis
needs an estimation of fixed cost, variable cost and revenue.

Fixed costs are usually expressed in terms of pesos per month, per day, or per year. Fixed cost remains the same regardless of the number of the units
produced or sold. Examples of fixed cost include rent, administrative expenses, advertising expenses and insurance.

Variable costs are costs that vary with the number of units produced or sold. Examples of variable costs include direct materials, direct labor, shipping
and packaging costs.

Revenue is the income obtained by producing or selling a certain number of units.

Contribution Margin is the difference between the selling price and the variable costs.

Break – Even Point refers to the sales (in peso or units) where the total revenue and the total costs are equal, that is, there is neither profit nor loss