Student Name: Muhammad Suleman Yousafzai
Student ID:BM-1633
Course name: Business Math’s
Course Code: MAT-103
Teacher: Rabia Qamar
Assignment: Write down the overview of business math’s
& what is its practical implementation
 Business Mathematics
Mathematics is an important part of managing business. Business and
mathematics go hand in hand this is because business deals with money
and money encompasses everything in itself. There is a need for everyone
to manage money as some point or the other to take decisions which
requires everyone to know mathematics. 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. It helps
you know the financial formulas, fractions; measurements involved in
interest calculation, hire rates, salary calculation, tax calculation etc. which
help complete business tasks efficiently. Business mathematics also
includes statistics and provides solution to business problems.
Business is always surrounded with challenges which need to be dealt with
in a proper fashion so that they do no arise in future. These problems that
occur on a daily basis can be effectively solved with the help of
mathematical models. Hence mathematics not only helps to calculate but
also analyze business problems and work upon them. Learning and using
business mathematics enables a person to think out of the box, sharpens
one’s thinking and helps in precisely formulating and structuring
relationships.
 What is Importance of Business Mathematics in
Management?
Mathematics is an important subject and knowledge of it enhances a
person's reasoning, problem-solving skills, and in general, the ability to
think. Hence it is important for understanding almost every subject whether
science and technology, medicine, the economy, or business and finance.
Mathematical tools such as the theory of chaos are used to mapping
market trends and forecasting of the same. Statistics and probability which
are branches of mathematics are used in everyday business and
economics. Mathematics also form an important part of accounting, and
many accountancy companies prefer graduates with joint degrees with
mathematics rather than just an accountancy qualification. Financial
Mathematics and Business Mathematics form two important branches of
mathematics in today's world and these are direct application of
mathematics to business and economics. Examples of applied maths such
as probability theory and management science, such as queuing theory,
time-series analysis, linear programming all are vital maths for business.
"Importance of Business Mathematics in Management" is sometimes called
commercial math or consumer math, is a group of practical subjects used
in commerce and everyday life. In schools, these subjects are often taught
to students who are not planning a university education. In the United
States, they are typically offered in high schools and in schools that grant
associate's degrees.
Importance of Business Mathematics in Management is the differences in
coursework from a business mathematics course and a regular
mathematics course would be calculus. In a regular calculus course,
students would study trigonometric functions. Business calculus would not
study trigonometric functions because it would be time-consuming and
useless to most business students, except perhaps economics majors.
Economics majors who plan to continue economics in graduate school are
strongly encouraged to take regular calculus instead of business calculus,
as well as linear algebra and other advanced math courses, especially Real
Analysis.
On the other way, meaning of business mathematics includes mathematics
courses taken at an undergraduate level by business students. These
courses are slightly less difficult and do not always go into the same depth
as other mathematics courses for people majoring in mathematics or
science fields. The two most common math courses taken in this form are
Business Calculus and Business Statistics. Examples used for problems in
these courses are usually real-life problems from the business world.
business math course might include a review of elementary arithmetic,
including fractions, decimals, and percentages. Elementary algebra is often
included as well, in the context of solving practical business problems. The
practical applications typically include checking accounts, price discounts,
markups and markdowns, payroll calculations, simple and compound
interest, consumer and business credit, and mort Description of Importance
of Business Mathematics in Management
Business management can be made more effective in some cases by use
of more advanced mathematics such as calculus, matrix algebra and linear
programming. Commercial organizations use mathematics in accounting,
inventory management, marketing, sales forecasting, and financial
analysis. In academia, "Business Mathematics in Management system"
includes mathematics courses taken a tan undergraduate level by business
students. These courses are slightly less difficult and do not always go into
the same depths other mathematics courses for people major in in
mathematics or science fields. The two most common math courses taken
in this form are Business Calculus and Business Statistics. Examples used
for problems in these courses are usually real-life problems from the
business world.
Mathematics is used in most aspects of daily life. Many of the top jobs such
as business consultants, computer consultants, airline pilots, company
directors and a host of others require a solid understanding of basic
mathematics, and in some cases require a quite detailed knowledge of
mathematics. It also plays important role in business, like Business
mathematics by commercial enterprises to record and manage business
operations. Mathematics typically used in commerce includes elementary
arithmetic, such as fractions, decimals, and percentages, elementary
algebra, statistics and probability.
An example of the differences in course work from a business mathematics
course and a regular mathematics course would be calculus. In a regular
calculus course, students would study trigonometric functions. Business
calculus would not study trigonometric functions because it would be timeconsuming and useless to most business students, except perhaps
economics majors. Economics majors who plan to continue economics in
graduate school are strongly encouraged to take regular calculus instead of
business calculus, as well as linear algebra and other advanced math
courses. Other subjects typically covered in a business mathematics
curriculum include Matrix algebra linear programming.
Business Mathematics Includes:
1. Principal - the initial amount of the debt, usually the price of the item
purchased.
2. Interest Rate - the amount one will pay for the use of someone else's
money. Usually expressed as a percentage so that this amount can be
expressed for any period of time.
3. Time- essentially the amount of time that will be taken to pay down
(eliminate) the debt. Usually expressed in years, but best understood as
the number of and interval of payments, i.e., 36 monthly payments.
Simple interest calculation follows the formula:
I= PRT, where
I=Interest
P=Principal
R= Interest Rate
T= Time.
The challenge: Belal decides to buy a car. The dealer gives him a price and
tells him he can pay on time as long as he makes 36 installments and
agrees to pay six per cent interest. (6%). The facts are:
Agreed price 18,000 for the car, taxes included.
3 years or 36 equal payments to pay out the debt.
Interest rate of 6%.
The first payment will occur 30 days after receiving the loan
A simple timeline will give you an idea of the question we need to address.
Understanding the simple effect of interest on an amount in terms of a
given time period and realizing that amortization is nothing more than a
progressive summary of a series of simple monthly debt calculations
should provide a person with a better understanding of loans and
mortgages. The math is both simple and complex; calculating the periodic
interest is simple but finding the exact periodic payment to amortize the
debt is complex.
By totaling the amount of interest and calculating the average, you can
arrive at a simple estimation of the payment required to amortize this debt.
Averaging will differ from exact because you are paying less than the actual
calculated amount of interest for the early payments, which would change
the amount of the outstanding balance and therefore the amount of interest
calculated for the next period. gages.
Use of Business Mathematics in business
In order to known a business, it requires skill more than the developing a
product or providing a service. If a business has to survive ad succeed it
needs to look after the finances and make necessary arrangements for it to
prosper as well. Understanding business mathematics is important to
maintain profitable operations and accurate keeping of records. It is
required right from the start for pricing products/services till the end when
we need to check if the budget was met. Let’s look at situations where
business mathematics is required:
•
Production costs calculation
Before one formally starts production and establishes its business it is very
important to estimate the costs that would be incurred in relation to the
manufacturing such as the cost of raw materials, machinery, rent,
administrative expenses etc. In addition to these basic expenses there are
other associated costs such as marketing, warehousing, interest and
repayment of loans etc. Once all he expenses relating to production have
been included, I would be easy to estimate the profit from it to sustain and
remain competitive in the market. Accurately determining the cost
associated with each item will make the base for the business strong.
•
Price determination
When you have successfully determined the costs, the next task is to price
the products correctly so that it generates right amount of cash flows for
future requirements of the business. Charging the correct selling price
would ensure that the product remains profitable.
•
Profit Measurement
These require determining the net profit by subtracting the operating costs
from the total amount of sales/revenue during a period of time. What also
needs to deducted are the tax, depreciation, discount expenses. This helps
to find out if the products are being charged enough to continue the
business operations and expand.
•
Financial Analysis
You need to project the revenue and expenses of a business if we need to
analyze the financial health of a business. We need to do sensitivity
analysis of how an increase or decrease in sales figure or pricing could
affect the business. It helps in determining how each employee contributes
to the business and how I would affect. Using business mathematics helps
in making these interpretations ad take the business to a higher level.
Career in Business Mathematics
In addition to mathematical knowledge any person who wants to make their
career in business mathematics one needs to also have knowledge of
subjects like economics, finance and business management in order to
open up many doors in this challenging field. As far the skills goes one has
to have good oral and written communication skills as business
mathematicians need to work on teams, collate research and be in contact
with clients.
Since all corporations require managing their money and business many
mathematicians find employment in these fields. Mathematicians follow a
logical thinking; follow a problem-solving approach to business.
Companies hire mathematicians to work as the following:
•
Actuaries
•
Financial analysts
•
Insurance underwriters
•
Budget Analysts
•
Market Research Analyst
•
Securities Analyst
Conclusion:
Business Mathematics in management system is able to make more
effective in some cases by use of more advanced mathematics such as
calculus, matrix algebra and linear programming. Business organizations
use mathematics in accounting, inventory management, marketing, sales
forecasting, financial analysis etc. Importance of Mathematics in
Management System is a scheme of Business Management.