A course in business mathematics teaches basic math skills for financial situations. A student will learn how to calculate payroll, asset valuation, interest and retail evaluations. This course is usually a requirement for students interested in pursuing a degree in finance, business administration, marketing or accounting.
Mathematics of Payroll
The primary skill taught is the calculation of gross pay based on hourly wages and commission. Using the percentage method, the student learns how to calculate federal, state and income taxes to determine net pay. Analysis on the effects of taxes on gross pay is performed.
Mathematics of Retailing
The ability to read and analyze a retail invoice by understanding the calculations necessary to determine markup based on cost, markup based on selling price, markdowns, adjusted cost, net profit, operating loss, absolute value and trade, series and cash discounts is taught in this section of the course.
Mathematics of Finance and Simple Interest Formulas
The calculation of interest earned using the simple interest formula is an example of a basic and commonly used financial formula taught in a business math course. Other important calculations taught in this category include: maturity value of a simple interest note, bank discount on a note, effective annual percentage rate of a note and payoff amount of a note.
Mathematics of Finance and Time Value of Money Problems
A calculator is used in this section to determine the initial value, future value, payment plan and interest accrued on a loan, savings plan and annuity. The use of computer software to determine time of money problems is also required.
The Valuation of Assets
The calculation of the value of inventory using average cost, straight-line depreciation and double-declining depreciation is important as it relates to the valuation of personal or financial assets of a company. Learning how to valuate assets is an important process in determining the economic health of an individual or company.
This course is generally required for more advanced coursework in business or finance mathematics, such as personal finance, principles of accounting, business procedures, retailing, business statistics and marketing principles. The student may find it helpful to embark upon more rigorous mathematics courses covering foundational basics, such as calculus, algebra and statistics in order to fully understand the topics and calculation methods used in any of the previously mentioned courses.
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