Importance of Business Math in Business
Business mathematics is mathematics used by commercial enterprises to record and manage business operations. Commercial organizations use mathematics in accounting, inventory management, marketing, sales forecasting, and financial analysis. Mathematics typically used in commerce includes elementary arithmetic, elementary algebra, statistics and probability. Business management can be made more effective in some cases by use of more advanced mathematics such as calculus, matrix algebra and linear programming.
In academia, “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. Importance of business mathematics in the field of business: There are many factors involved in starting and operating a business.
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Records must be kept of sales taxes collected and owed, unemployment and social security taxes paid out and of course the income of the business. It is not necessary to have someone with a degree in accounting to handle these matters although that may be desirable for larger businesses. Good training in business math can be obtained in a variety of ways. Most university business degree programs have business math courses as part of the requirements as do business schools that offer associate degrees.
There are also good courses available from different sources on the Internet. Many of these courses are general business math courses, but there are also specific courses available for individual Whatever the source, all businesses require someone that is thoroughly familiar with business math. This is necessary for the protection of the owner, the business, and even the employees. However, getting the training needed for someone does not have to be expensive or overly time consuming. Some major importance of business mathematics in business:
Mathematics have been one of the primary elements of business. Since ancient times, when farmers had to count the animals in their possession and merchants had to have a clear picture of their goods’ value. With the introduction of money as the universal legal tender, all goods acquired a numerical value, making math calculations even more important. Furthermore, in the competitive global market environment of today, businesses have to take advantage of every opportunity for profit, making frequent statistical market analyses a necessity. Money Transactions:
The four basic math operations are essential to understand transactions and calculate profits and losses. On every transaction, from paying your grocery bill to making an investment, a certain amount of money is removed from one budget to another. Hence, a transaction always includes a subtraction from the buyer’s budget and an addition to seller’s budget. In cases of mass payments, such as during a monthly payday or when people buy tickets for a concert, you can multiply the value of individual tickets or paychecks by the number of spectators or employees.
This way you can find the total cost of a payroll or the total gate earnings. Identifying Market Trends: Market analysis is one of the core elements of a business plan. Understanding the needs of a consumer base, as well as your competitor’s strengths in the market is knowledge that can give an edge to your business. You must analyses data from questionnaires, as well as from official sources like the Census Bureau and use your statistical skills to group them and convert them into percentages to discover the consumers’ trends and your piece of the market pie chart.
Measuring Economic Performance: The Gross Domestic Product, commonly known as the GDP, is the sum of private consumption plus government spending plus gross investment plus the difference or exports minus imports. It’s a lot of additions and in a failing economy subtractions, for which you need math skills to compute. To find the GDP per capita, you must divide the nominal GDP by the country’s population. Furthermore, the growth or shrinking of an economy is evident when subtracting the newest GDP estimates with older data. Understanding Inflation and Interest Rates:
Interest rate is the percentage of surplus value a borrower has to give the lender. A quite simplistic example of an interest rate is when a borrower receives $100 with a 3 percent interest and has to repay $103. Another occasion when math knowledge on percentages is helpful in economics is when you must calculate the future prices of products and services based on the current rate of inflation. For example, if we assume that the U. S. economy’s inflation in 2008 was 2. 5 percent, a loaf of bread costing $1. 75 in 2008 will rise up to 1. 75 + (1. 75 — 0.025) = $1. 79.
Relation between business mathematics and business: 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 math such as probability theory and management science, such as queuing theory, time-series analysis, linear programming all are vital math for business.
Mathematics is a universal language. Yes!! It’s a language whereas students consider it as a big problem itself. We would be lost to any point in history or right after evolution if it wast for the subject of numbers. Let us try to understand that mathematics s not a problem but an answer to all those who want to make money or look at their situation financially. Businesses are defined by what they profit from their operations. Mathematics imparts clarity to our business reasoning and neatly presents the voluminous analysis in a few equations or diagrams.
While it is important to Business, It should not supplant the latter. It should act subservient just like scaffolding to a newly constructed building. Conclusion: In the end we can say that business Mathematics doesn’t just deal on solving and presenting equations non representation of a missing quantity rather it also focuses on the careful analysis of each data and its structure. With mathematics, we know how to do checks and balances to know and interpret the economic status of the business as well as the country.
We know now the potential power at present if the country is submerging or growing. Business Mathematics is very important for Modern business management. The forecasting and operating procedures are based primarily on business mathematics. Things such as simple interest, compound interest show a company that what will it lose/get over the years if it invests in a particular asset. Business mathematics also helps in cost and price calculations which are the basis of cash inflows and outflows.