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Business Mathematics

Business mathematics as the term states is related to business which involves mainly profit, loss and interest. This page is designed to provide you the best help with these basic topics. Below are the important business math topics that are explained in this page with example by using business math formulas:

  • Selling Price : The market price that is taken to sell a product is the selling price.
  • Cost Price: The actual price of a product is the cost price.
  • Profit: If the selling price is greater than the cost price, the difference of the prices is the profit.
  • Loss: If the selling price is less than the cost price, the difference of the prices is the loss.
  • Discount: The reduction given to the selling price of a product is the discount.
  • Simple Interest: Simple interest is that interest that is counted against the principal amount or the portion of principal amount that remains unpaid.
  • Compound Interest: Compound interest is the investment rate that grows exponentially.

Let's understand this in detail. While doing business one may earn a good profit or face loss. The price of an article is fixed by taking into consideration of its cost price, profit, margin, trade discount, cash discount etc. The price marked on the article is called marked price or catalog price. For trading purposes the manufacturer offers a discount in the marked price to the buyer. This is called trade discount. In addition to trade discount if the buyer pays cash against goods he gets another discount called cash discount. The price of the article after deducting the trade discount and cash discount is called as the selling price. Thus we have Selling price = Cost price - Discounts.

Profit = Selling price - Cost price

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What is Business Math?

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Business math always is deals with profit or loss. The cost of a thing or products are fixed by taking into consideration of its profit, margin, cash discount, trade discount, etc.

Business mathematics is used by commercial enterprises to record and manage business operations. Commercial organizations use mathematics in accounting, inventory management, marketing, sales forecasting, and financial analysis. The Main categories in business math are,

  • Money math
  • Paying taxes
  • Interest
  • Investing
  • Saving
  • Profit and loss and etc.,

Calculating Profit Percentage

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Solved Example

Question: A manufacturer gains 25% after allowing a trade discount of 15% of the list price of an article. The cost of manufacturing the article is increased by 25% and the catalog price is increased by 20% only. Find the new profit percent keeping the same rate of discount.
Solution:
 
Let the catalog price be 100 dollars

Discount = 15 dollars

Selling price = 85 dollars

Cost price = 85 x 100/125

= 68 dollars

Increase in cost price = 25%

New cost price = 68 x `(125)/(100)` = 85 dollars

New catalog price = (100 + 20) = 120 dollars

New selling price=120 x `(85)/(100)` = 102 dollars

New profit= 102 - 85 = 17 dollars

Profit percent = `(17)/(85)` x 100 = 20
 


How to Calculate Cost

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Below you could see the business math problems

Solved Examples

Question 1: In selling a sewing machine, a person loses 5%. If he has sold it for $120 more, he would have got a profit of 10%. What is its cost price?
Solution:
 
Let the cost price be x dollars

Loss = 5%

Selling price = 95x/100

By selling it for 120 dollars more profit is 10%

Therefore, `((((95x)/100 + 120)) - x )/(x) = 10/100`

On simplifying, x = 800 dollars

Cost price of the sewing machine = 800 dollars
 

Question 2: A fruit seller bought 55 fruits for the cost 120. Among the 64 fruits 9 are damaged. Then he sold the undamaged fruits for the cost 32 each. Calculate and find the profit or loss percent of his business.
Solution:
Cost Price of 55 fruits = $120.

9 are damaged fruits.

Remaining fruits = 55 – 9 = 46

Selling Price of one fruit is  = $32

Selling Price of 46  fruits = 46 × 32 = $1472.

Here the sales Price is greater than Cost Price.

Profit = Selling Price – Cost Price

= 1472 – 120 = $1352

Profit % = $\frac{profit}{cost price}$ × 100

= $\frac{1352}{120}$ × 100

Profit percentage is = 1126.66 %


Profit and Loss

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Profit and loss both are very important to learn the concepts of math.

Explanation:

  • Suppose a shopkeeper buys an article from a manufacturer or wholesale dealer, the money paid by the shopkeeper to buy the article is called the cost price of the article. Generally we write C.P. for the cost price.

  • The shopkeeper sells the article which is generally more than its C.P. The price at which the shopkeeper sells the article is called the selling price of the article. Generally we write S.P. for the selling price.

  • If the S.P. of an article is greater than the C.P., then the shopkeeper has earned a gain or profit.

Solved Examples

Question 1: A television set was bought for 10,500 dollar and sold at $ 9,500. Find the profit or loss.
Solution:
C.P. of the television set = ` $` 10,500
S.P. of the television set = `$` 9,500
Here C.P. is greater than S.P. so there is a loss.
Loss = C.P. – S.P.
= 10,500 – 9,500 = ` $` 1,000.


Question 2: A bag is bought at ` $` 200 and sold at a profit of 10%. Find the selling price.
Solution:
Profit = 10% of `$` 200
=`10/200` × 200 = $ 20
S.P. = C.P. + Profit
= 200 + 20 = `$` 220


More topics in Business Mathematics
Discount Rates Markup
Interest Rate
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