Basics of

Business Mathematics

Introduction:
Mathematics is the soul of any business. Because a business primarily revolves around the
transaction of money or products that have some monetary value. Involvement of money makes
it extremely important to have sufficient knowledge about the basics of calculations. This is where
business mathematics comes into play.

It deals with the fundamental topics that one needs to carry out business related calculations. So,
here we are going to learn about the mathematical tools needed for business calculations
along with their applications.

Types of Numbers:

Natural Numbers - Common counting numbers.

Prime Number - A natural number greater than 1 which has only 1 and itself as factors.
Composite Number - A natural number greater than 1 which has more factors than 1 and itself.
Whole Numbers - The set of Natural Numbers with the number 0 adjoined.
Integers - Whole Numbers with their opposites (negative numbers) adjoined.
Rational Numbers - All numbers which can be written as fractions.
Irrational Numbers - All numbers which cannot be written as fractions.
Real Numbers - The set of Rational Numbers with the set of Irrational Numbers adjoined.
Complex Number - A number which can be written in the form a + bi where a and b are real
numbers and i is the square root of -1.
A general example to help you recognize patterns and spot the information you're looking for
A list of types of numbers and examples.

Type of Number Example

Natural Numbers N=1,2,3,4,...N=1,2,3,4,...

Prime Number P=2,3,5,7,11,13,17,…P=2,3,5,7,11,13,17,…

Composite Number 4,6,8,9,10,12,...4,6,8,9,10,12,...

Whole Numbers W=0,1,2,3,4,…W=0,1,2,3,4,…

Integers Z=…,−3,−2,−1,0,1,2,3,…Z=…,−3,−2,−1,0,1,2,3,…

Rational Numbers Q=−12,0.33333…,52,1110,…Q=−12,0.33333…,52,1110,…

Irrational Numbers F=...,π,2–√,0.121221222...F=...,π,2,0.121221222...

Real Numbers R=...,−3,−1,0,15,1.1,2–√,2,3,π,…R=...,−3,−1,0,15,1.1,2,2,3,π,…

Complex Number C=...,−3+2i,0,1+3i,…

Important Algebraic formulas:

• a2 – b2 = (a – b) (a + b)
• (a + b)2 = a2 + 2ab + b2
• a2 + b2 = (a + b)2 – 2ab
• (a – b)2 = a2 – 2ab + b2
• (a + b + c)2 = a2 + b2 + c2 + 2ab + 2bc + 2ca
• (a – b – c)2 = a2 + b2 + c2 – 2ab + 2bc – 2ca
• (a + b)3 = a3 + 3a2b + 3ab2 + b3 ; (a + b)3 = a3 + b3 + 3ab(a + b)
• (a – b)3 = a3 – 3a2b + 3ab2 – b3 = a3 – b3 – 3ab (a – b)
• a3 – b3 = (a – b) (a2 + ab + b2)
• a3 + b3 = (a + b) (a2 – ab + b2)
• (a + b)4 = a4 + 4a3b + 6a2b2 + 4ab3 + b4
• (a – b)4 = a4 – 4a3b + 6a2b2 – 4ab3 + b4
• a4 – b4 = (a – b) (a + b)(a2 + b2)
• a5 – b5 = (a – b) (a4 + a3b + a2b2 + ab3 + b4)
• If n is a natural number an – bn = (a – b) (an-1 + an-2b+…+ bn-2a + bn-1)
• If n is even (n = 2k), an + bn = (a + b) (an-1 – an-2b +…+ bn-2a – bn-1)
• If n is odd (n = 2k + 1), an + bn = (a + b) (an-1 – an-2b +an-3b2…- bn-2a + bn-1)
• (a + b + c + …)2 = a2 + b2 + c2 + … + 2(ab + ac + bc + ….)
• Laws of Exponents (am)(an) = am+n ; (ab)m = ambm ; (am)n = amn

Roots of Quadratic Equation:

o For a quadratic equation ax2 + bx + c = 0 where a ≠ 0, the roots will be given

by the equation as

o Δ = b2 − 4ac is called the discriminant

o For real and distinct roots, Δ > 0
o For real and coincident roots, Δ = 0
o For non-real roots, Δ < 0
o If α and β are the two roots of the equation ax2 + bx + c = 0 then, α + β = (-b /
a) and α × β = (c / a).
o If the roots of a quadratic equation are α and β, the equation will be (x − α)(x −
β) = 0
Baisc Properties of Logarithm:
Time Value of Money Related Concepts:
Basics of Set Theory:

Discounts:
Discounts are reductions in the selling price of an article or the amount of a bill. Discounts
are expressed as rates or percent.

The list price of an article is the original price. The net price is the list price minus the
discount.

To find the amount of a discount, multiply the list price, or base, by the rate of discount.

Formula: P = B x R

Example: A used car listed at $925.00 was sold at a discount of 10%. Find the discount.

B = INR 925, R = 10% P=?

P = B x R; P = INR 925 x .10 = INR 92.50
Commission:
Commission is the amount of money paid to an agent for buying or selling goods. When the
commission is some percent of the value of the services performed, that rate percent is called
the rate of commission.

Gross proceeds or selling price is the money received by the agent for his employer. In
commission calculations this is called the base. Net proceeds is the gross proceeds minus the
commission.

To find the commission, multiply the principle amount, or base, by the rate of commission.

Formula: Commission (P) = Base (B) x R (R),

or... P = B x R

Example: A real estate agent sold a piece of property

for INR 50,000. His commission is 7.5%.
How much does he receive?

P = INR 50,000, B = 7.5% P =?

INR 50,000 x .075 = INR 3,750.00 commission

Profit and Loss Basic Concepts:

Let us learn profit and loss concepts in maths. It is well explained in terms of cost price and
selling price.

Profit(P)

The amount gained by selling a product with more than its cost price.

Loss(L)

The amount the seller incurs after selling the product less than its cost price, is mentioned as a
loss.

Cost Price (CP)

The amount paid for a product or commodity to purchase it is called a cost price. Also,
denoted as CP. This cost price is further classified into two different categories:

Fixed Cost: The fixed cost is constant, it doesn’t vary under any circumstances

Variable Cost: It could vary depending as per the number of units

Selling Price (SP)

The amount for which the product is sold is called Selling Price. It is usually denoted as SP.
Also, sometimes called a sale price.

Marked Price Formula (MP)

This is basically labelled by shopkeepers to offer a discount to the customers in such a way
that,

Discount = Marked Price – Selling Price

And Discount Percentage = (Discount/Marked price) x 100

Profit and Loss Formulas

The profit or gain is equal to the selling price minus cost price.

Loss is equal to cost price minus selling price.

Profit or Gain = Selling price – Cost Price

Loss = Cost Price – Selling Price

The formula for the profit and loss percentage is:

Profit percentage = (Profit /Cost Price) x 100

Loss percentage = (Loss / Cost price) x 100

Videos on some important topics:

S. No. Topic Video Link
1 Logarithms - Basics https://youtu.be/4UNkQcBrLaQ
2 Rules of Logarithms https://youtu.be/bPLyCH1WaEY
3 Matrices https://youtu.be/JMjbPh1Mjn8
4 Linear Equations in Two Variables https://youtu.be/ycLK0nAqGVI

THE END