Business Mathematics
Encyclopedia
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.
An example of 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
.
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.
A U.S. 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 mortgages.
The emphasis in these courses is on computational skills and their practical application, with practical application being predominant. For instance, while computational formulas are covered in the material on interest and mortgages, the use of prepared tables based on those formulas is also presented and emphasized.
Mathematics
Mathematics is the study of quantity, space, structure, and change. Mathematicians seek out patterns and formulate new conjectures. Mathematicians resolve the truth or falsity of conjectures by mathematical proofs, which are arguments sufficient to convince other mathematicians of their validity...
used by commercial
Commerce
While business refers to the value-creating activities of an organization for profit, commerce means the whole system of an economy that constitutes an environment for business. The system includes legal, economic, political, social, cultural, and technological systems that are in operation in any...
enterprises to record and manage business operations. Commercial organizations use mathematics in accounting, inventory management, marketing
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
, sales forecasting
Forecasting
Forecasting is the process of making statements about events whose actual outcomes have not yet been observed. A commonplace example might be estimation for some variable of interest at some specified future date. Prediction is a similar, but more general term...
, and financial analysis
Financial analysis
Financial analysis refers to an assessment of the viability, stability and profitability of a business, sub-business or project....
. Mathematics typically used in commerce includes elementary arithmetic
Elementary arithmetic
Elementary arithmetic is the simplified portion of arithmetic which is considered necessary and appropriate during primary education. It includes the operations of addition, subtraction, multiplication, and division. It is taught in elementary school....
, elementary algebra
Algebra
Algebra is the branch of mathematics concerning the study of the rules of operations and relations, and the constructions and concepts arising from them, including terms, polynomials, equations and algebraic structures...
, statistics
Statistics
Statistics is the study of the collection, organization, analysis, and interpretation of data. It deals with all aspects of this, including the planning of data collection in terms of the design of surveys and experiments....
and probability
Probability
Probability is ordinarily used to describe an attitude of mind towards some proposition of whose truth we arenot certain. The proposition of interest is usually of the form "Will a specific event occur?" The attitude of mind is of the form "How certain are we that the event will occur?" The...
. Business management can be made more effective in some cases by use of more advanced mathematics such as calculus
Calculus
Calculus is a branch of mathematics focused on limits, functions, derivatives, integrals, and infinite series. This subject constitutes a major part of modern mathematics education. It has two major branches, differential calculus and integral calculus, which are related by the fundamental theorem...
, matrix algebra
Matrix algebra
Matrix algebra may refer to:*Matrix theory, is the branch of mathematics that studies matrices*Matrix ring, thought of as an algebra over a field or a commutative ring...
and linear programming
Linear programming
Linear programming is a mathematical method for determining a way to achieve the best outcome in a given mathematical model for some list of requirements represented as linear relationships...
.
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.
An example of 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
Real analysis
Real analysis, is a branch of mathematical analysis dealing with the set of real numbers and functions of a real variable. In particular, it deals with the analytic properties of real functions and sequences, including convergence and limits of sequences of real numbers, the calculus of the real...
.
Commercial maths
Another meaning of business mathematics, sometimes called commercial math or consumer math, is a group of practical subjects used in commerceCommerce
While business refers to the value-creating activities of an organization for profit, commerce means the whole system of an economy that constitutes an environment for business. The system includes legal, economic, political, social, cultural, and technological systems that are in operation in any...
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.
A U.S. business math course might include a review of elementary arithmetic
Elementary arithmetic
Elementary arithmetic is the simplified portion of arithmetic which is considered necessary and appropriate during primary education. It includes the operations of addition, subtraction, multiplication, and division. It is taught in elementary school....
, including fractions, decimals, and percentages. Elementary algebra
Algebra
Algebra is the branch of mathematics concerning the study of the rules of operations and relations, and the constructions and concepts arising from them, including terms, polynomials, equations and algebraic structures...
is often included as well, in the context of solving practical business problems. The practical applications typically include checking accounts, price discounts
Discounts and allowances
Discounts and allowances are reductions to a basic price of goods or services.They can occur anywhere in the distribution channel, modifying either the manufacturer's list price , the retail price , or the list price Discounts and allowances are reductions to a basic price of goods or services.They...
, markups and markdowns
Markup (business)
Markup is the difference between the cost of a good or service and its selling price. A markup is added on to the total cost incurred by the producer of a good or service in order to create a profit. The total cost reflects the total amount of both fixed and variable expenses to produce and...
, payroll
Payroll
In a company, payroll is the sum of all financial records of salaries for an employee, wages, bonuses and deductions. In accounting, payroll refers to the amount paid to employees for services they provided during a certain period of time. Payroll plays a major role in a company for several reasons...
calculations, simple and compound interest
Interest
Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
, consumer and business credit
Credit (finance)
Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately , but instead arranges either to repay or return those resources at a later date. The resources provided may be financial Credit is the trust...
, and mortgages.
The emphasis in these courses is on computational skills and their practical application, with practical application being predominant. For instance, while computational formulas are covered in the material on interest and mortgages, the use of prepared tables based on those formulas is also presented and emphasized.