BUSINESS MATH (REVIEWER) INCREASE AND DECREASE IN P. B. AND R.

Fraction to Percent PERCENT INCREASE

¼ = 0.25 x 100 = 25% Used to illustrate how much quantity of an amount
has increased over its original value.
¾ = 0.75 x 100 = 75%
Formula:
Percent to Fraction
𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 𝒐𝒇 𝑰𝒏𝒄𝒓𝒆𝒂𝒔𝒆 = 𝑩𝒂𝒔𝒆 + (𝑩𝒂𝒔𝒆 ∙ 𝑹𝒂𝒕𝒆)
25% = 25/100 = ¼
PERCENT DECREASE
75% = 75/100 = ¾
Used to illustrate how much a quantity or an
Decimal to Percent
amount decreased from its original value.
0.52 x 100 = 52%
Formula:
0.176 x 100 = 17.6%
𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 𝒐𝒇 𝑫𝒆𝒄𝒓𝒆𝒂𝒔𝒆 = 𝑩𝒂𝒔𝒆 − (𝑩𝒂𝒔𝒆 ∙ 𝑹𝒂𝒕𝒆)
Decimal to Fraction
RATE
0.75 = 0.75/1 x 100 = 75/100 = 3/4
Formula:
0.625 = 0.625/1 x 1000 = 625/1000 = 5/8
𝑹𝒂𝒕𝒆 = 𝑳𝒂𝒓𝒈𝒆𝒓 𝑨𝒎𝒐𝒖𝒏𝒕 − 𝑺𝒎𝒂𝒍𝒍𝒆𝒓 𝑨𝒎𝒐𝒖𝒏𝒕
FUN FACTS
𝑩𝒂𝒔𝒆
÷ - Obelus BASE OF INCREASE
a/b – Virgule Formula:
a - Vinculum 𝑩𝒂𝒔𝒆 𝒐𝒇 𝑰𝒏𝒄𝒓𝒆𝒂𝒔𝒆 = 𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆
b 𝟏 + 𝑹𝒂𝒕e
PRINCIPLES OF PERCENTAGE BASE OF DECREASE
Formula:
𝑩𝒂𝒔𝒆 𝒐𝒇 decrease = 𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆
P 𝟏 – 𝑹𝒂𝒕e

V R RATIO AND PROPORTION

RATIO
Percentage Way of expressing the relationship of a number,
quantity, substance, or degree between two
The variable in the percentage formula that
similar components. It can be written as:
represents a part of the base.
1. 7 𝑡𝑜 3
Base
2. 7: 3
The number that represents 100% or the total
value of something, or the whole thing. 3. 7 Antecedent
Rate 3 Consequent
Defines what part of the base the percentage is.
 Sample problem:
PROPORTION A company that produces smartphones
determined that the number of smartphones it can
Way of expressing the comparative relationship
sell (S) is inversely proportional to the Price (P) of
between a part, share, or portion with regards to
the smartphone. 4,500 can be sold when the price
measurement, amount or number. It is expressed
is Php 8,000. How many smartphones can be sold
as a relationship between two ratios. It can be
if the price of the smartphone is Php 7,500?
written as:
Solution:
1. 1: 3 = 4: 12
4500 = k
2. 1 ÷ 3 = 4 ÷ 12
8000
3. 1 = 4
k= (4500) (8000)
3 12
k= 36,000,000
4. 1: 3 ∷ 4: 12
s = 36,000,000
MEANS
7500
Inner numbers
s= Php 4,800
EXTREMES
PARTITIVE PROPORTION
Outer numbers
Involves identifying parts of a whole based on a
DIRECT PROPORTION given ratio of parts or in other words when the
whole is partitioned into two or more equal or
𝑦 = 𝑘x
unequal parts.
Sample problem:
Sample problem:
Vien bought 9 tickets to an international product
A certain company has overhead cost of Php
exposition for Php 2,025. How many tickets could
133,434 last week. What portion of the overhead
he purchase with Php 3,825?
should sales, advertising and operations
Solution: departments received if they share in the ratio of
4:6:11, respectively?
9:2025:: x : 3825
Solution:
9 = x
4:6:11 x= share
2025 3825
4x + 6x+ 11x
9 (3825) = 2025 x
21x = 133434
34 425 = 2025 x
21 21
2025 2025
x= 6354
x = 17
4 (6354) + 6 (6354) + 11 (6354)
Php25,416:Php35,124:Php69,894
INVERSE PROPORTION

𝑦=𝑘
X
BUSINESS APPLICATION
PARTNERSHIP PROBLEM
Sample Problem:
Partners N, L, and M share profits and losses: 20%
to N, 30% to L, and 50% to M. Compute the share
of each if the partnership earned a net income of
Php 15,000.
Solution:
P = BR
A= (Php 15,000)(20%) = Php 3,000 RATIO ANALYSIS

B= (Php 15,000)(30%) = Php 4,500  A form of vertical analysis.

 Used to determine certain ratios important
C= (Php 15,000)(50%) = Php 7,500 in business decision-making.
Net Income = Php 3,000 + Php 4,500 + Php 7,500 PROFITABILITY RATIOS
= Php 15,000 RETURN ON OWNER’S INVESTMENT (ROI)
TAX PROBLEM Sample Problem:
Sample Problem: If a company earns a net profit of Php 100,000 and
A corporation earned Php 36,800 in net income the capital of the owner(s) is Php 1,000,000, the
before tax. If the corporation\s income tax is 35% ROI would be?
compute for the net income after tax. Solution:
Solution: ROI= Net Profit
NIAT=NIBT – Income Tax Owner’s Investment
NIAT = NIBT – (NIBT * Income Tax Rate) = Php 100,000
= Php 36,800 – (Php 36,800 * 35%) Php 1,000,000
= Php 36,800 – (Php 36,800 * 0.35) = 10%
= Php 36,800 – Php 12,880 PROFIT MARGIN or RETURN ON SALES (ROS)
NIAT = Php 23,920 If a company earned a net profit of Php 100,000
VERTICAL ANALYSIS from the generated sales of Php 900,000, the
return on sales or profit margin would be?
 Involves the comparison of one number
Solution:
with another to identify significant
relationships. ROS = Net Profit
 Used in the common-size statements.
- Are financial statements Net Sales
expressed in percent. = Php 100,000
Php 900,000
= 11.11%
LIQUIDITY OR SOLVENCY RATIONS
LIQUIDITY
Refers to the ratios used to gauge if the company
can meet its current liabilities, those that need to
be paid within the current year.
SOLVENCY
Concerned with meeting the long-term obligations
of the company, those maturing in more than one
year. HOW DO WE SET THE SELLING PRICE OF AN
CURRENT RATIO ITEM?

Sample Problem: RULE #1: Price > Cost

If a company has Php 300,000 current assets and RULE #2: Price < Customer’s Willingness to Pay
Php 100,000 current liabilities, its current ratio TYPES OF PRICING
would be?
 Cost-based Pricing
Solution:  Competitive Pricing
Current ratio = Current assets  Value Pricing

Current liabilities BUYING AND SELLING

= Php 300,000 Cost – Refers to the purchase price of an article.

Php 100,000 Markup – Amount by which the cost of a product

is increased in order to derive the selling price.
= 3 or 3:1
Markdown – Amount of reduction in selling prices
1
Initial Markup- Refers to the amount added to the
DEBT RATIO cost to arrive at the original selling price
Sample Problem: Example: A trader bought a product for Php 100.
Assuming a firm with total liabilities of Php 450,000 Cost Php 100
and the total assets of Php 900,000, the debt ratio Plus: Initial markup or mark-on Php 20
would be? Original selling price Php 120
Debt Ratio= Total liabilities
Additional Markup- Refers to the amount added
Total Assets
to the original selling price to arrive at a new selling
= Php 450,000 price.
Php 900,000 Example: The trader decided to increase his/her
selling price from Php 120 to Php 150, then
= 1 or 1:2
Original Selling Price Php 120
2
Plus: Additional Markup Php 30
HORIZONTAL ANALYSIS New Selling Price Php 150

 Also known as trend analysis

 Refers to comparing figures of financial
statement of one period with the figures of
financial statement of another period.
Markup Cancellation- Refers to the decrease in AVAILABLE GOODS FOR SALE
the new selling price that does not decrease it
Beginning Inventory + Purchase
below the original selling price.
COST OF GOODS SOLD
Example: If the trader saw that his/her new selling
price is not appealing to his/her customers, he/she Available Goods for Sale – Ending Inventory
may lower his or her price.
NET SALES
New Selling Price Php 150
Less: Markup Cancellation Php 10 Gross Sales – Sales Returns, Allowances, and
Reduced Selling Price Php 140 Discounts
Less: Markup Cancellation Php 20 GROSS PROFIT
Original Selling Price Php 120
Net Sales – Cost of Goods or Services Sold
Markdown- Refers to the reduction in the original NET PROFIT/LOSS
selling price.
Gross Profit – Operating Expenses
Example: If the trader saw that his/her new selling
price is not appealing to his/her customers, he/she COMPONENTS OF BREAK-EVEN ANALYSIS
may lower his or her price. VOLUME- the level of production by a company
Original Selling Price Php 120 which is expressed as the number of units
Less: Markdown Php 5 (quantity) produced and sold.
New Reduced Selling Price Php 115 PROFIT- the difference between total sales and
Less: Markdown Php 5 total cost or the income generated by the sale of a
New Reduced Selling Price Php 110 product.
COST- the usual number of different costs that
PROFIT AND LOSS must be taken into account in order to determine
Terminologies the profit.

Profit- The remainder amount of the selling price FIXED COST

after all costs have been deducted It is a cost that is independent of the volume of the
Loss- The deficit amount when the cost and units produced.
expenses exceed the selling price VARIABLE COST
Inventory- Refers to the goods that a business It is a cost determined on per - unit basis. It grows
holds for the purpose of selling to the customers in direct proportion to the volume of sales
Net Profit/Loss- Operating profit plus other FORMULA:
income less other expense
Sales = Variable Costs + Fixed Costs
Break-even Analysis- Determination of the
number of units that must be produced and sold to Px= vx + FC
equate to the total sales with total cost
Where P is the unit Price
Break-even Point- The volume of sales for which
x is the number of units
total sales equals total costs where profit is equal
to zero v is the variable cost per unit; and
FORMULAE FC is the total fixed cost
PROFIT/LOSS
Selling Price – Cost
Formula for Break-Even Point in Number of Units: COMPUTING FOR CASH DISCOUNTS
x = FC Cash discount = (NIP) (Discount Rate)
(P-v) COMMISSIONS
Break-even Point in Pesos (BEP) A Way of compensation mainly used to pay
employees who sell company’s commodities or
BEP in Pesos = Unit Price x BEP in Units
services.
DISCOUNTS
TYPES:
The amount deducted from the selling price of a
Straight Commission
product or service.
A type of commission wherein the salesperson’s
TYPES:
earning or wage is based on his/her commission
Trade Discount – discount offered by a alone.
manufacturer or wholesaler to encourage resellers
Incremental Commission
(customers) to purchase a product.
It is given to salespersons who do not receive a
 Single Discount – Makes use of the basic
regular salary and their commission rate increases
percentage formula
as the sales volume increases.
 Series of Discounts – The seller grants
additional discounts other than the FORMULA:
discount ordinarily given by him or her
Level Pay = Sales per Level x Commission Rate
Salary Plus Commission
Cash Discount – the discount given to persuade
customers to pay in cash immediately or within a When an employee is being paid a guaranteed
specified time. salary plus commission on total sales made by the
employee
Term of Sale or Purchase – The rate of cash
discount is shown under the terms of payment FORMULA:
granted by the seller to the buyer.
Total Gross= Salary + Commission
Terms of Payment
Commission and Bonus
n n
It is when a salesperson is given a bonus if he/she
eom 45 exceeds his/her sales quota. In cases that the
sales does not exceed the prescribed quota by the
COMPUTING FOR DISCOUNT PERIOD AND
company, the salesperson will not receive any
CREDIT PERIOD
bonus.
Example:
FORMULA:
Date of Invoice = March 2, Term: 2 10 = 𝑛 30
Commission = Commission Rate x Amount of
Date of Invoice March 2 Sales
Discount Period 10 days
Commission with Override
Deadline for the discount period March 12
is when a salesperson earns commission on
his/her own sales and also earns commission from
March has 31 days
Less Invoice Date 2 days his/her representatives.
No. of days in March 29 FORMULA:
April 1
Credit Period 30 Total Commission= Commission 1+ Commission 2
Draw Against Commission
is when a salesperson is being paid in advance of
sales and later deducted from the commission
earned. It is a way for a company to provide its
salespeople at least some income during lean
period of sales.
FORMULA:
Commission owed = Commission – Amount of
Draw COMPOUND INTEREST
INTEREST Is computed based on the principal plus the
SIMPLE INTEREST accumulated interest.

The interest computed on the principal only. FORMULA:

FORMULA: I = Prt

I = Prt
MATURITY VALUE
FORMULA:
F= P + I
F = P + Prt
Example:
F = P (1 + rt )
An amount of Php 100,000 is invested for 2 years
Example: at 6% interest compounded quarterly. Is this a
better investment compared to investing it at a
What would be the interest Kaye has to pay if she
simple interest of 6%?
borrowed Php 10,000 for 1 year with an interest
rate of 6% per annum? What is the total amount
that Kaye will pay at the end of 1 year?
I = Prt
I = ( Php 10,000) (0.06) (1)
I = Php 600

F=P+I
F = (Php 10,000) + (Php 600)
F = Php 10,600
If instead of paying Php 10,600 at the end of 1
year, Kaye was required by the lender to pay Php
10,750, what is the rate of interest applied on the
loan?