Final Exam Alternative Assignment

APPLICATION OF BUSINESS MATHEMATICS IN THE REAL WORLD

Name : Zahid Bin Ali

ID : 2019110000010
Section :1
Course Name : Business Mathematics
Course Code : BUS 121
Program : BBA
 Executive Summary

Business Mathematics “includes mathematics courses taken at an undergraduate level by

business students. These courses are marginally less troublesome and don't continually going to a
similar profundity as other arithmetic courses for individuals studying math or science fields.
The two most basic numerical courses taken in this structure are Business Calculus and Business
Statistics. Models utilized for issues in these courses are typically genuine issues from the
business world. An illustration of the distinctions in course work from a business science course
and an ordinary math course would be analytics. In a normal math course, understudies would
contemplate mathematical capacities. Business analytics would not investigation geometrical
capacities since it would be tedious and futile to most business understudies, aside from maybe
financial aspects majors. Financial aspects majors who intend to proceed with financial aspects
in master's level college are emphatically urged to take ordinary analytics rather than business
math, just as direct variable based math and other progressed math courses. Different subjects
regularly shrouded in a business science educational plan include:

 Matrix algebra
 Linear programming
 Probability theory
 Set

In Our study we show how integral and differential Business calculus is used in Business as a
part of our topic “Application of Mathematics in real world.

Table Of Content
The most important topics covered in Business Mathematics are:

 Profit and Loss

 Statistics
 Simple and Compound Interest
 Interest Rates
 Loans
 Markups and markdowns
 Taxes and Tax Laws
 Discount Factor
 Annuities
 Insurance
 Credit
 Depreciation
 Future and Present Values
 Financial Statements
 Introduction

Business proprietorship requires more than ability in making an item or ability at offering an
assistance. Supervising the accounts of your organization is critical to endurance and
achievement. Understanding essential business math is fundamental for beneficial tasks and
exact record keeping. Realizing how to add, take away, duplicate, partition, round and use rates
and portions is the base you need to value your item and meet your spending plan. In the event
that math isn't your solidarity, cooperate with somebody who can assume control over that job or
recruit a believed representative to help your activity stay operating at a profit dark and develop
capably.

Since the exploration theme is "Utilization of Mathematics in genuine Business - A Study on

"Square Pharmaceuticals Ltd." and furthermore discover how math rules are applied in the
business to decide normal expense, negligible const, Net benefit and so forth
Mathematicians, financial analysts, analysts and others have applied their abilities to oversee
issues for a long time. The previously purposeful and significantly fruitful exertion in their zones
happened during World War II when experts were shaped into tasks investigation gatherings to
help with arranging military activities. These examiners utilized arithmetic and insights broadly
in their examinations, and their subsequent proposals were a significant commitment to the war
exertion. Following the war, examiners, before long joined by others, turned their consideration
and their new procedures to tackling issues of oversee mental activities. They achieved
significant improvement in stock control, quality control, distribution center area, modern
activities, farming, buying choices, planning complex assignments and an assortment of others.

Business Mathematics Basic Terms

 Selling Price: The market price is taken to sell a product.

 Cost Price: The original price of the product is the cost price.
 Profit: If the selling price is more than the cost price, the difference in the prices is the
profit.
 Loss: If the selling price is less than the cost price, the difference in the prices is the loss.
 Discount: The reduced amount in the selling price of a product.
 Simple Interest: Simple interest is that interest which is counted against the capital
amount or the portion of the main amount that remains unpaid.
 Compound Interest: Compound interest is the investment rate that increases
exponentially.
What Is a Profit and Loss Statement (P&L)?

The profit and loss (P&L) statement is a financial statement that summarizes the revenues, costs,
and expenses incurred during a specified period, usually a fiscal quarter or year. The P&L
statement is synonymous with the income statement. These records provide information about a
company's ability or inability to generate profit by increasing revenue, reducing costs, or both.
Some refer to the P&L statement as a statement of profit and loss, income statement, statement
of operations, statement of financial results or income, earnings statement or expense statement.

P&L management refers to how a company handles its P&L statement through revenue and cost
management.

What Are Statistics?

Statistics is a form of mathematical analysis that uses quantified models, representations and
synopses for a given set of experimental data or real-life studies. Statistics studies methodologies
to gather, review, analyze and draw conclusions from data. 

Simple and Compound Interest

The interest, typically expressed as a percentage, can be either simple or compounded. Simple

interest is based on the principal amount of a loan or deposit. In contrast, compound interest is
based on the principal amount and the interest that accumulates on it in every period.

Interest rate 
An interest rate is the percentage of principal charged by the lender for the use of its money. The
principal is the amount of money loaned. Interest rates affect the cost of loans. What Is a Loan?

Loan
The term loan refers to a type of credit vehicle in which a sum of money is lent to another party
in exchange for future repayment of the value or principal amount. In many cases, the lender also
adds interest and/or finance charges to the principal value which the borrower must repay in
addition to the principal balance. Loans may be for a specific, one-time amount, or they may be
available as an open-ended line of credit up to a specified limit. Loans come in many different
forms including secured, unsecured, commercial, and personal loans.

Markups and markdowns

Markup is how much to increase prices and markdown is how much to decrease prices. To
calculate markup, we need to find out how much more our prices are than the cost to produce the
item. Then we find the markup percentage by dividing the difference by the cost to produce
them.
Tax laws
Tax laws are the rules and regulations that stipulate how, when, and how much must be paid in
taxes to local, state, and federal authorities.

What is a Discount Factor?

In financial modeling, a discount factor is a decimal number multiplied by a cash flow value to
discount it back to its present value. The factor increases over time (meaning the decimal value
gets smaller) as the effect of compounding the discount rate builds over time.  Practically
speaking, it is easier to use the XNPV function in Excel. However, a benefit of manually
calculating the discount factor is that you can see what the present value of each individual cash
flow is, as opposed to only the total NPV.

Annuities
Annuities are insurance contracts that provide a fixed income stream for a person's lifetime or a
specified period of time. An annuity can be purchased with a lump sum or a series of payments
and begin paying out almost immediately or at some point in the future. Annuities are often used
as a way to fund retirement.

What Is Insurance?
Insurance is a contract, represented by a policy, in which an individual or entity receives
financial protection or reimbursement against losses from an insurance company. The
company pools clients' risks to make payments more affordable for the insured.
Insurance policies are used to hedge against the risk of financial losses, both big and small, that
may result from damage to the insured or her property, or from liability for damage or injury
caused to a third party.

What Is Credit?
This term is broad with many different meanings in the financial world. Credit is generally
defined as a contractual agreement in which a borrower receives something of value now and
agrees to repay the lender at a later date generally with interest. Sometimes, it may even involve
crediting a 401(k), for instance.
Credit also refers to the creditworthiness or credit history of an individual or company. It also
refers to an accounting entry that either decreases assets or increases liabilities and equity on a
company's balance sheet.
What Is Depreciation?
Depreciation is an accounting method of allocating the cost of a tangible or physical asset over
its useful life or life expectancy. Depreciation represents how much of an asset's value has been
used up. Depreciating assets helps companies earn revenue from an asset while expensing a
portion of its cost each year the asset is in use. If not taken into account, it can greatly
affect profits.
Businesses can depreciate long-term assets for both tax and accounting purposes. For example,
companies can take a tax deduction for the cost of the asset, meaning it reduces taxable income.
However, the Internal Revenue Service (IRS) states that when depreciating assets, companies
must spread the cost out over time. The IRS also has rules for when companies can take a
deduction.

Present Value Vs. Future Value in Annuities

Present value and future value are terms that are frequently used in annuity contracts. The
present value of an annuity is the sum that must be invested now to guarantee a desired payment
in the future, while its future value is the total that will be achieved over time.

What Are Financial Statements?

Financial statements are written records that convey the business activities and the financial
performance of a company. Financial statements are often audited by government agencies,
accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes.
Financial statements include:
 Balance sheet
 Income statement
 Cash flow statement.
Business Mathematics Formulas
Here, the 9 basic Business Mathematics formulas that we cannot ignore. They are:
Net Income Formula:
Net Income = Revenue – Expense
Accounting Equation:
Assets = Liabilities + Equity
Equity = Assets – Liabilities
Cost of Goods Sold Formula:
COGS = Beginning inventory + Purchase during the period – Ending inventory
Break-Even point Formula:
Break-Even Point = Fixed cost / (Sales Price per unit – variable cost per unit)
Current Ratio Formula:
Current Ratio = Current Assets / Current Liabilities
Profit Margin Formula:
Profit Margin = (Net Income/ Revenue) × 100
Return of Investment (ROI) Formula:
ROI = [(Invest gain – Cost of Investment)/ Cost of Investment] × 100
Markup Formula:
Markup Percentage = [(Revenue- COGS)/COGS] × 100
Selling Price using Markup = (COGS × markup percentage) + COGS
Where,
COGS = Cost of goods sold
Inventory Shrinkage Formula:
Inventory Shrinkage = [(Recorded Inventory – Actual Inventory)/ Recorded Inventory] × 100

Business Mathematics Example

While doing business, one can earn a good profit or face loss. The price of a product is fixed,
taking into consideration it’s cost price, profit, margin, trade discount, cash discount, etc. The
price marked on the commodity is called marked price or catalogue price. For trading purposes,
the manufacturer proposes a discount on the MRP to the buyer. This is called a trade discount. In
addition to the trade discount, if the buyer pays cash against goods, he gets another cut called
cash discount. The price of the object after subtracting the trade discount and cash discount is
called the selling price. Thus, we have, Selling price = Cost price – Discounts. Let us discuss the
most important concept called “Profit and Loss” here.
Profit and Loss:
A profit is the earned amount received by a business on selling a product whereas loss is the
amount which is less than the actual price of the product. The formula for profit and loss is given
based on the selling price and cost price of a commodity.

 Profit = Selling Price – Cost Price = S.P. – C.P. (S.P. > C.P)
 Loss = Cost Price – Selling Price = C.P. – S.P. (C.P. > S.P.)

Both these measures have their percentage value also and they are given by;

 Profit% = [(S.P. – C.P.)/C.P]. x 100 = (Profit/C.P.) x 100

 Loss% = [(C.P. – S.P.)/C.P.] x 100 = (Loss/C.P.) x 100

Business Mathematics Problems and Solutions

Question 1: A music system was bought for Rs.10,500 and sold at Rs.9,500. Find the amount of
profit or loss.
Solution: Given,
Cost Price of the music system = Rs.10,500
Selling Price of the music system = Rs. 9,500
We can see here, C.P. is greater than S.P. Therefore, there is a loss in this business.
Hence, we need to calculate the loss amount.
Loss = C.P. – S.P.
Loss = 10,500 – 9,500 = Rs.1,000/-.
Question 2: A pair of shoes is bought at Rs 200 and sold at a profit of 10%. Find the selling price
of the shoes.
Solution: Given,
Profit = 10% of Rs.200
P = (10/100) × 200 = Rs. 20
S.P. = C.P. + Profit
S.P. = 200 + 20 = Rs.220/-
Question 3: If the cost price of an article including 20% for taxes is Rs. 186, then find the
original cost of the article excluding taxes.
Solution:
Let x be the original price of an article.
Tax = 20% of x = (20/100) × x = 0.2x
According to the given statement,
Original cost + tax = New cost price
x + 0.2x = Rs. 186
1.2x = Rs. 186
x = Rs. 186/1.2
x = Rs. 155
Therefore, the cost of the article without taxes = Rs. 155
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Objective of the report

The main objective of this study is to gain knowledge about Application of Mathematics in Real
World Business.

Primary Objectives:
The main objective of this report is to analyze Financial Statement of “Square Pharmaceuticals
Ltd.” to find out how they Apply Integral and Differential calculus function in their Financial
Statement.

Scope of the Study :

There were huge scopes to work in the arena of the case. Considering the dead line, the scope
and exposure of the paper has been wide-ranging. The study behind “Application of Mathematics
in Real World Business has covered overall analysis by which we can know about the
Application of mathematics which they use.
 Application of Mathematics in Real World:
Here the secondary sources of information were used. The secondary sources are:
 Web sites
 Books
 Annual report

Limitation of the study:

As we collected our information through secondary sources, so we have not been able to collect
more information which could give us more clear knowledge about the Application of Math.
While conducting the case on “Application of Mathematics in real world Business - A Study on
“Square Pharmaceuticals Ltd.” some limitations were yet present there:

 Lack of time shortage many related part cannot be paying attention in depth.
 Current data and information on different activities was unavailable.
 As a report analysis, it has been prepared shortly .

Business Mathematics
Business arithmetic is science utilized by business ventures to record and oversee business tasks.
Business associations use science in bookkeeping, stock administration, promoting, deals
guaging, and monetary examination.
Math normally utilized in business incorporates rudimentary number juggling, rudimentary
polynomial math, measurements and likelihood. Business the executives can be made more
viable sometimes by utilization of further developed science, for example, analytics, grid
polynomial math and straight programming; see activities research.

Average Deviation
There are various recipes that measure the inconstancy of information. A typical one is the
standard deviation. Nonetheless, normal deviation is comparable and simpler to figure. The
normal deviation just finds the normal distance each number is from the mean. To locate the
normal deviation, the separation from the mean is found for each piece of information in the set.
Those distances are added and afterward isolated by the quantity of bits of information. In the
event that the mean is 32, we would need 28 and 36 to both be viewed as sure 4 units from the
mean. Total worth is utilized so there are no negative qualities for those distances.
Statistical Margin of Error
As commanded by the U.S. constitution, at regular intervals the public authority is needed to take
a statistics including each individual in the United States. It is a gigantic endeavor and includes a
very long time of work. So how are public TV appraisals, film industry results, and joblessness
rates figured so immediately—regularly week after week or even day by day? Most public
insights depend on gathering information from an example. Numerous insights that are supposed
to be public in degree are really information taken from an example of a couple thousand. Any
measurement that is essential for an example is dependent upon a safety buffer. (In 1998,
President bill clinton endeavored to consolidate inspecting in directing the 2000 evaluation, in
any case, this was controlled as illegal

Calculus
Analytics is the numerical investigation of change, similarly that math is the investigation of
shape and variable based math is the investigation of tasks and their application to settling
conditions.

Analytics is a piece of present day math training. A course in analytics is an entryway to other,
further developed courses in science committed to the investigation of capacities and cutoff
points, comprehensively called numerical examination.

It has two significant branches. They are

 Differential Calculus (concerning rates of change and slopes of curves), and
 Integral Calculus (concerning accumulation of quantities and the areas under and
between curves);

Differential Calculus
Differential calculus is the study of the definition, properties, and
applications of the derivative of a function. The process of finding the derivative is called
differentiation. Given a function and a point in the domain, the derivative at that point is a way of
encoding the small-scale behavior of the function near that point. By finding the derivative of a
function at every point in its domain, it is possible to produce a new function, called the
derivative function or just the derivative of the original function.

Integral Calculus
Integral calculus is the study of the definitions, properties, and utilizations of two related ideas,
the uncertain basic and the unequivocal indispensable. The way toward finding the estimation of
an indispensable is called joining. In specialized language, essential math considers two related
direct administrators.
The inconclusive essential is the counter subordinate, the reverse activity to the subsidiary. F is
an uncertain necessary of f when f is a subsidiary of F. (This utilization of lower-and capitalized
letters for a capacity and its inconclusive necessary is normal in math.)
The unequivocal indispensable sources of info a capacity and yields a number, which gives the
arithmetical amount of zones between the diagram of the information and
the x-pivot. The specialized meaning of the clear vital is the restriction of
an amount of zones of square shapes, called a Riemann total.
The image of incorporation is , a stretched S (the S means "whole"). The clear indispensable is
composed as:

Application of Mathematics in Real World Business

the x-axis. The technical definition of the definite integral is the limit of a sum of areas of
rectangles, called a Riemann sum.
The symbol of integration is, an elongated S (the S stands for "sum").

Theory of Sets
Set theory is a mathematical abstract concerned with the grouping of sets of numbers that have
commonality. For example, all even numbers make up a set, and all odd numbers comprise a set.
All numbers that end in zero make up a set of numbers that can be divided by 10. Using and
comparing sets enables the creation of theories and rules that have practically unlimited scope,
whether in mathematics or applied to areas such as business.

Matrix
A matrix organizes a group of numbers, or variables, with specific rules of arithmetic. It is
represented as a rectangular group of rows and columns.

Application of Mathematics in Real World Business

We can only add matrices of the same dimensions, because we add the corresponding elements. .
Matrix multiplication is another matter entirely. Let’s multiply matrices MP=R. M is an m X n
matrix; P is n X p; and the result R will have dimension m X p. Note that the number of columns
of the left-hand matrix, M, must equal the number of rows of the right hand matrix, P. For
example. A matrix can also multiply, or be multiplied by, a vector.
Matrix mathematics has many applications. Mathematicians, scientists and engineers represent
groups of equations as matrices; then they have a systematic way of doing the math. Computers
have embedded matrix arithmetic in graphic processing algorithms, especially to render
reflection and refraction. Some properties of matrix mathematics are important in math theory.
However, few of us are likely to consciously apply matrix mathematics in our day to day lives.

Conclusion
From the analysis we can say that Mathematics can be applied in business operation and it helps
us a lot to do business accurately and easily.

Bibliography

BOOKS
 Mathematics With Applications In Management & Economics (7th edition) by Prichett &
Saber
 Business Mathematics (11th edition) by D.C. Sancheti & V.K. Kapoor.

Website
http://smallbusiness.chron.com/importance-basic-math-business-41097.html
http://www.scribd.com/doc/12243159/Role-of-Mathematics-in-Business
http://en.wikipedia.org/wiki/Business_mathematics
https://byjus.com/maths/business-mathematics/
https://www.investopedia.com/