Maths has its importance in almost every field, whether it is Medical, Engineering, Agriculture, Aeronautics, Marine, etc. Hence, it is considered to be one of the most important subjects. But what role does it play in the field of business? How can a businessman use do mathematical calculations to know profit gained in business? Let us figure out here based on some Maths concepts.
Percentage
Percentages help to describe changes in quantified items, such as sales, losses, market share, and take rate, in an easy way which some people, who are not mathematically-minded, may not understand. To determine and use a percentage, we require to do light math. We will also want a set of at least two numerical values that describe the same thing, for example, the total number of TVs sold in the first year and the total number of TVs sold in the second year. If the number of TVs sold in seconds year is more than first-year then the difference of percentage increase in the sale of TV can be represented by Percentage.
Average is a basic mathematical concept which is used in almost everyday life. In business, when we speak about average, it is the ratio of the total number of quantities and the total number of quantities. Suppose, a man sells ten baskets daily at different prices, so the average amount of each basket could be calculated if we add the total amount for which he has sold the baskets and divides it by 10. The generated amount will be the average of the individual basket.
One of the most important topics of Maths concerning the business is profit and loss. The profit & loss account presents information about the company’s income and expenses, which result in a total profit or total loss. It helps a businessman to estimate the performance of the industry and presents a basis for determining future performance. It also gives valuable information needed by a banker while approving a loan. The Profit & Loss account represents different business ventures such as revenues and expenses, especially useful in evaluating the risk of not fulfilling a certain level of income in the future. It also presents the information needed to determine tax debts.
Compound Interest
Owners of small companies often have restricted sources of income and are moreover burdened by costs, making it remarkably challenging to provide generous amounts to saving accounts. Also in money-tight positions, we need to set a part of your incomes aside for savings and cover a pathway to an ensured future. If you want highest returns on your savings and investments, expenses that offer compound interest computations can be viable alternatives.
Basically, there are two types of interest, simple interest and compound interest. While simple interest determines interest on the primary principal only, compound interest allows you to enjoy higher profits by returning your interest on the capital amount plus the interest you earlier earned. Suppose, a person invested Rs. 1,000 and made Rs. 50 in interest after the earning period. The new principal becomes Rs.1,050. The interest rate will be implemented to Rs. 1,050, not to your actual Rs. 1,000, the next time, interest is computed.
Compound interest helps to gain profits for a company. It is a means for profit increase if used carefully. It works as a revenue multiplier, and with every passing year, the interest that investors earn grows because they make interest on interest
