BUSINESS MATHEMATICS

ADDITION, SUBTRACTION, MULTIPLICATION,

DIVISION OF FRACTIONS
Lesson Objectives
At the end of the lesson, the students should be able to:
1. add similar and dissimilar fractions, and mixed
numbers;
2. subtract similar and dissimilar fractions, and mixed
numbers;
3. multiply fraction by another fraction, whole number,
and mixed number; and
4. divide fractions by another fraction, whole numbers
by fractions, and mixed numbers by mixed numbers.
 Addition of Fractions
Similar Fractions
• add the numerators and retain the denominator
• reduce fractions to lowest terms

1 2 5 1+2+5
+ + = =𝟏
8 8 8 8
2 3 1 2 +3 +1 6 𝟏
+ + = = =𝟏
4 4 4 4 4 𝟐
 Addition of Fractions
Dissimilar Fractions
• convert dissimilar fractions to similar (using LCD)
• perform addition of similar fractions

5 1 5 2 𝟕
+ → + =
8 4 8 8 𝟖
1 1 1 6 4 3 13 𝟏
+ + → + + = =𝟏
2 3 4 12 12 12 12 𝟏𝟐
 Addition of Fractions
Mixed Numbers
• add the whole numbers, then add fractional parts
1 1 3 2 𝟓
2 + 5 = (2+5) + + =𝟕
2 3 6 6 𝟔

• or change into improper fractions then add

1 1 5 16 15 32 47 𝟓
2 +5 → + → + = =𝟕
2 3 2 3 6 6 6 𝟔
 Subtraction of Fractions
Similar Fractions
• subtract the numerators and copy the denominator
• reduce fractions to lowest terms

15 8 15 − 8 𝟕
− = =
16 16 16 𝟏𝟔
5 3 (5 − 3) 2 𝟏
− = = =
8 8 8 8 𝟒
 Subtraction of Fractions
Dissimilar Fractions
• convert dissimilar fractions to similar (using LCD)
• perform subtraction of similar fractions

2 1 8 3 𝟓
− → − =
3 4 12 12 𝟏𝟐
5 1 20 3 𝟏𝟕
− → − =
6 8 24 24 𝟐𝟒
 Subtraction of Fractions
Mixed Numbers
2 1 2 1 𝟏
8 − 3 = (8 − 3) + − =𝟓
5 5 5 5 𝟓
2 1 8 3 𝟓
12 − 8 → 12 − 8 = 𝟒
3 4 12 12 𝟏𝟐
1 3 1 6 9 6 𝟑
23 − 15 → 23 − 15 → 22 − 15 = 𝟕
8 4 8 8 8 8 𝟖
 Subtraction of Fractions
Mixed Numbers and Whole Numbers
3 4 3 𝟏
14 − 3 → 13 − 3 = 𝟏𝟎
4 4 4 𝟒
3 8 3 𝟓
25 − 6 → 24 − 6 = 𝟏𝟖
8 8 8 𝟖
2 𝟐
18 − 7 = 𝟏𝟏
5 𝟓
 Multiplication of Fractions
Fraction by Another Fraction

1 41 1×1 𝟏
× = =
2
8 7 2 × 7 𝟏𝟒
1 1 1
5 2 4 𝟏
× × =
6 12 2 8 3 15 𝟑𝟔
 Multiplication of Fractions
Fraction by a Whole Number
1
2 2 3 1 ×3 3 𝟏
×3 → × = = =𝟏
4 2
4 1 2 ×1 2 𝟐
5
3 25 3 5 ×3 15
25 × → × = = = 𝟏𝟓
5 1 15 1 ×1 1
 Multiplication of Fractions
Whole Number by a Mixed Number

1 13 26 𝟏
2 ×3 → 2 × = =𝟔
4 4 4 𝟐

1 41 697 𝟏
17 × 5 → 17 × = = 𝟖𝟕
8 8 8 𝟖
 Multiplication of Fractions
Mixed Number by a Mixed Number

3 1 11 3 33 𝟏
2 ×1 → × = =𝟒
4 2 4 2 8 𝟖
 Division of Fractions
Fraction by another Fraction

2 3 2 4 𝟖
÷ → × =
3 4 3 3 𝟗
1
12 5 12 17 12 𝟐
÷ → × = =𝟐
17 17 17 5 5 𝟓
1
 Division of Fractions
Whole Numbers and Fraction

2 5 3 15 𝟏
5 ÷ → × = =𝟕
3 1 2 2 𝟐
1 6 4 24
6 ÷ → × = = 𝟐𝟒
4 1 1 1
 Division of Fractions
Mixed Numbers
• always change mixed numbers to improper
fractions and proceed with division
2
1 1 33 17 33 8 𝟏𝟓
8 ÷2 → ÷ → × =𝟑
4 8 4 8 1
4 17 𝟏𝟕
63
1 1 126 16 126 3 𝟐𝟗
25 ÷ 5 → ÷ → × =𝟒
5 3 5 3 5 16 8 𝟒𝟎
Exercises:
Perform the indicated operation.
1 3 1 2
1. 4
+
8
+
6
−
3
1 2
2. 8− 5 +2
2 5
6 2
3. 3× ÷
27 23
3 5 5
4. 4
×3+ ÷
6 6
17 6 3 3
5. 24
× +
7 14
÷
5
CHANGING FRACTIONS TO DECIMALS
AND PERCENT AND VICE VERSA
Lesson Objectives

At the end of this lesson, the students should be able to:

1. express fractions to decimals;
2. convert fractions to percent;
3. change decimals to fractions;
4. express decimals to percent;
5. convert percent to decimals;
6. change percent to fractions; and
7. apply knowledge of conversion to business problems.
 Converting Fractions to Decimal
To reduce fractions into decimal,
we simply perform division.

3
If we want to change into decimal, we divide 3 by 4:
4
.75
4 3.00 3
- 28 Therefore, = 0.75
4
20
- 20
0
Converting Fractions to Percent
To convert fractions into percent,
we change the fractions into decimal
(by performing division),
and move the decimal point
two places to the right,
then affix the percent symbol (%).
 Converting Fractions to Percent
Examples:

1
1. =1 ÷ 2 = .05 = 𝟓𝟎%
2
5
2. 12
=5 ÷ 12 = 0.41666 = 𝟒𝟏. 𝟔𝟕%
8
3. 11
=8 ÷ 11 = 0.72727 = 𝟕𝟐. 𝟕𝟑 %
Converting Decimals to Fraction
To change decimals to fraction,
we convert a decimal into a fraction
with a denominator in multiples of 10
(10, 100, 1000, etc.)
and reduce the said fraction
into lowest terms.
 Converting Decimals to Fraction
Example:
75
1. 0.75 = 0.75 has two decimal places.
100
75 ÷25 Our denominator has to have
=
100÷25 two zeroes; hence 100.
𝟑
=
𝟒 375
2. 0.375 =
1000
0.375 has three decimal =
375 ÷ 125
1000 ÷125
places. Our denominator 𝟑
should have three zeros; =
𝟖
hence, 1,000.
Converting Decimals to Percent
To convert decimals to percent,
we move the decimal point
two places to the right
and affix the percent sign (%).

Example: 1. 0.75 = 75%

2. 1.25 = 125%
Converting Percent to Decimals
To convert percent to decimal,
we move the decimal point
two places to the left
and we drop the percent sign (%).
This is exactly the opposite of what we did
when we converted decimals to percent.
 Converting Percent to Decimals
Examples:

1. 45% = 0.45
2. 3% = 0.03
3. 23.56% = 0.2356
4. 100% = 1
Converting Percent to Fraction

To convert percent to fraction,

we first change percent to decimal,
then change the decimal to fraction
and reduce to lowest terms.
 Converting Percent to Fraction
Examples:
14 𝟕
1. 14% = 0.14 = =
100 𝟓𝟎
5 𝟏
2. .5% = 0.005 = =
1000 𝟐𝟎𝟎
125 5 𝟏
3. 125% = 1.25 = = =𝟏
100 4 𝟒
50 𝟏
4. 50% = 0.50 = =
100 𝟐
Exercises:
3
1. Change 2 to decimal
4
8
2. Change to percent
9
3. Change 1.75 to fraction
4. Change 0.258 to percent
5. Change 6.34% to decimal
6. Change 85% to fraction
BASE, RATE, AND PERCENTAGE

RATIO AND PROPORTION

Lesson Objectives
At the end of this lesson, the students should be able to:
1. identify and define base, rate, and percentage;
2. explain the relationship among base, rate, and
percentage;
3. solve for the base, rate, and percentage;
4. define ratio and explain how it is used in business;
5. define proportion and discuss how it is used in business;
and
6. differentiate direct proportion, indirect/inverse
proportion, and partitive proportion, and apply them in
business.
 Base, Rate, Percentage

Base (B) refers to the number of which

a certain number of hundredths is taken
Rate (R) refers to the number of hundredths taken
Percentage (P) is the part considered in its
quantitative relation to the whole,
it is the part of the whole

P = BR
 Finding the Percentage
We find the percentage by
multiplying the base and the rate P = RB
1. Fifty percent of 24 is what?
Given: R = 50% B = 24
1
P = BR = (24)(50%) = (24) = 12
2
2. Twenty-three percent of ₱365 is what?
Given: R = 23% B = ₱365
P = BR = (₱365)(23%) = (₱365)(.23) = ₱83.95
 Finding the Base
To find the base, 𝐏
we divide the percentage by the ratio B=
𝐑
1
1. If I have ₱25 which represents of my entire
4
money, how much money do I have in all?
1
Given: P = ₱25 R=
4

P ₱25 4
B = = 1 = ₱25 × = ₱100
R 1
4
 Finding the Rate
To find the rate, 𝐏
we divide the percentage by the base R=
𝐁
1. What part of 400 is 50?
Given: B = 400 P = 50
P 50 𝟏
R= = =
B 400 𝟖
2. How many percent of ₱1,200 is ₱400?
Given: B = ₱1,200 P = ₱400
P 400 𝟏
R= = = = 0.333 = 𝟑𝟑. 𝟑𝟑%
B 1200 𝟑
Finding the Rate of Increase/(Decrease)

𝐐𝟐 −𝐐𝟏
Rate of Increase/(Decrease) =
𝐐𝟏
where Q1 = original quantity
Q 2 = new quantity

The difference (𝑄2 − 𝑄1 ) is positive if it is an increase,

and a negative if it is a decrease
 Finding the Rate of Increase/(Decrease)

Zeny’s current salary is ₱3,600 a month. Her previous salary

was ₱3,200. What is the rate of increase in her salary?

Given: Current salary = ₱3,600 = Q 2

Previous salary = ₱3,200 = Q1

Q2 − Q1 ₱3,600 −₱3,200 ₱40

R= = =
Q1 ₱3,200 ₱3,200
1
= = 0.125 = 12.5%
8
 Ratio
Ratio is a relation between two numbers or two
magnitudes of the same kind.
1
1:2, , 1÷2 indicate ratios
2

Two ways of finding the ratio:

1. Division
2. Comparing numerators of fractions with the same
denominator
 Proportion
Proportion refers to the equality between ratios.
means

1 : 2 = 8 : 16
extremes

product of means = product of extremes

2 × 8 = 1 × 16
16 = 16
 Type of Proportions
1. Direct proportion
- as one value increases/decreases, so does the other

2. Indirect/inverse proportion
- as one value increases, the other decreases

3. Partitive proportion
- identifying parts of a whole based on a given ratio of
these parts
 Direct Proportion
If three notebooks cost ₱15, how many notebooks
can you buy with ₱60?

The number of notebooks is directly proportional to the cost.

3 x
=
₱15 ₱60
(3)(60) 180
x= =
15 15
= 12 notebooks
 Inverse Proportion
In a rectangle, as the length of one side doubles, the
width has to be halved for the area to stay the same.

A 5 cm x 4 cm rectangle has an area of 20𝐜𝐦𝟐 .

If the 5-cm side becomes 10 cm (doubled),

the 4-cm side becomes 2 cm (halved),
10 cm x 2 cm is still equal to 20𝐜𝐦𝟐 .
 Partitive Proportion
When a partnership agreement stipulates an agreed
capitalization of ₱100,000 and the partners are to divide the
said capitalization in the ratio of 1:2:2, we get the
corresponding parts as follows:

1
X = × ₱100,000 = ₱20,000
5
2
Y = × ₱100,000 = ₱40,000
5
2
Z = × ₱100,000 = ₱40,000
5
= ₱100,000
Exercises:
1. ₱45.50 is 25% of what amount?
1
2. 3 of 125 is what number?
2
3. What part of 360 is 18?
4. What is the percent of increase/(decrease) of an item on
sale at ₱55 with an original price of ₱125
5. The number of dogs in a park is double the number of
cats, and the number of cats is half the number of birds. If
there are 84 animals in the park, how many of each animal
are there?
6. A fort can be finished by 30 men in 10 days. If 5 of them
decided to leave, how long can the rest do the job?
BUSINESS APPLICATIONS
Lesson Objectives

At the end of this lesson, the students should be able to:

1. solve partnership problems;
2. solve tax problems;
3. perform vertical analysis of financial statements;
4. perform horizontal analysis of financial statements;
and
5. perform ratio analysis.
 Partnership Problems
Partners A, B, and C share profits and losses: 20% to A,
30% to B, and 50% to C. Compute the share of each if
the partnership earned a net income of ₱15,000.
Given: A = 20% B = 30% C = 50% Net = ₱15,000
P = BR
A = ₱15,000 × 20% = ₱3,000
B = ₱15,000 × 30% = ₱4,500
C = ₱15,000 × 50% = ₱7,500
 Tax Problems
A corporation earned ₱36,800 in net income before
tax. If the corporation’s income tax is 35%, compute
for the net income after tax.

Given: Net income before tax (NIBT) = ₱36,800

Income tax rate (ITR) = 35%
Net income after tax (NIAT) = NIBT – Income Tax
 Tax Problems

NIAT = NIBT – Income Tax

= NIBT – (NIBT × Income tax rate)
= ₱36,800 – (₱36,800 × 35%)
= ₱36,800 – ₱12,880
= ₱23,920
 Vertical Analysis of Financial Statements

1. Convert the following Income Statements to a

common-size statement:
Excelsior Enterprises
Income Statement
For the Month Ended June 30, 2010
Net Sales ₱150 000.00
Less: Cost of Sales ₱ 90 000.00
Gross Profit ₱ 60 000.00
Less: Operating Expenses ₱ 35 000.00
Net Income ₱ 25 000.00
 Net Sales ₱150 000.00
Less: Cost of Sales ₱ 90 000.00
Gross Profit ₱ 60 000.00
Less: Operating Expenses ₱ 35 000.00
Net Income ₱ 25 000.00

Net Sales 100%

90,000
Less: Cost of Sales = 60%
150,000
60,000
Gross Profit = 40%
150,000
35,000
Less: Operating Expenses = 23.33%
150,000
25,000
Net Income = 16.67%
150,000
 Ratio Analysis – Profitability Ratios

1. Return on Owner’s Investment (ROI)

If a company earns a net profit of ₱100,000 and the
capital of the owner is ₱1,000,000, the ROI would be:
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
ROI =
𝑂𝑤𝑛𝑒𝑟 ′ 𝑠 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡
₱100,000
=
₱1,000,000
= 10%
 Ratio Analysis – Profitability Ratios

2. Profit Margin or Return of Sales (ROS)

If a company earned a net profit of ₱100,000 from
the generated sales of ₱900,000, the return on sales
or profit margin would be:
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
ROI =
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠
₱100,000
=
₱900,000
= 11.11%
 Liquidity/Solvency Ratios
1. Current Ratio
If a company has ₱300,000 current assets and
₱100,000 current liabilities, its current ratio would be:
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
Current ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
₱300,000 3
= =
₱100,000 1
= 3:1
For every ₱1 of liability or debt, the company has ₱3 to pay it.
 Liquidity/Solvency Ratios
2. Debt Ratio
Assuming a firm with total liabilities of ₱450,000 and
total assets of ₱900,000, the debt ratio would be:
𝑇𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Debt ratio =
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
₱450,000 1
= =
₱900,000 2
= 1:2
The firm has ₱1 liability for ₱2 total assets.
 Horizontal Analysis
Let us study the following trend analysis of the
comparative income statements of a certain firm:
201B 201A Amount %
(P000) (P000) (P000) R
Q2 Q1

Sales 150 125 25 20.00

Cost of Sales 90 70 20 28.57
Gross Profit 60 55 15 27.27
Operating Expenses 35 45 (10) (22.22)
Net Income 25 10 15 150.00
 Horizontal Analysis
Getting the percent of increase/(decrease):
Q 2 − Q1
R=
Q1
150,000 − 125,000 25,000
= = = 𝟐𝟎%
125,000 125,000

For the operating expenses:

35,000 − 45,000 (10,000)
R= = = (𝟐𝟐. 𝟐𝟐%)
45,000 45,000
Exercises:
1. What is the tax rate of a product if Martin paid ₱2,354
with included ₱87 as sales tax?
2. Bea and Camille agreed to share profits and losses
according to their capital ratio. Using Bea’s capital of
₱16,000 and Camille’s ₱25,000, find the share of each in a
net loss of ₱5,500.
3. If a company has a return of investment of 15% and a
capital of ₱1,700,000, what is the company’s net profit?
4. A company has a current ratio of 4:1. If the company has
₱100,000 current assets, what is their current liabilities?