Sunday, June 17, 2012

Welcome to Business Math!

So, our Business Math lessons started last week and I never thought that Business Math has a huge relevance to my course. I've realized that I'll be using this in the near future. Prof. Paner has taught us the basics in Business Math. The terms you'll mostly encounter with your business and while studying this subject. Let me share you a few things that I've learned in our first week!

Profit and Loss
Profit is the amount by which the sales are greater than the cost of goods sold and the operating expenses. Margin also means gain or profit.

The formulas in computing profit are as follows;

Net Sales = Gross Sales – Refunds and Allowances
Net Profit = Gross Profit – Operating Expenses

The net sales and profit may also be given in scheme diagram as follows:
                    Gross Sales
-   Sales Returns and Allowances
    Net Sales
-   Costs of Goods Sold
    Gross Profit
-   Operating Expenses
    Net Profit

 1. Gross Sales is the actual amount received for selling the goods.
2. Refunds are amounts returned usually if goods are defective.
3.  Net sales are obtained when refunds are being deducted from the gross sales.
4. Costs of goods sold or buying price is the amount paid for articles bought including the buying expenses.
To compute for the cost of goods sold for a period of time, we have the formula as follows:
Available Goods = Beginning Inventory + Purchases Costs of Goods Sold = Available Goods – Ending Inventory
The above may be diagrammed as follows:
Beginning Inventory + Purchases Goods For Sale - Ending Inventory Costs of Goods Sold
5. Inventory is an itemized lists of goods on hand.
6. Gross Profit is the difference between the net sales and the cost of goods sold.
7. Operating expenses or overhead are selling expenses such as salaries or wages, traveling expenses, rentals, water, electric bills, commissions, taxes.
8. Net Profit is the amount obtained when all the selling expenses or other cost of doing business are deducted from the gross profit.

In case the sales are less than the cost of goods sold, there is a loss. The formulas in computing losses are as follows:

Gross Loss = Costs of Goods Sold – Net Sales Net Loss = Gross Loss + Operating Expenses

The relationship of the terms of loss may be diagrammed schematically as follows:

Cost of Goods Sold - Net Sales Gross Loss + Operating Expenses Net Loss

That's a lot to take in right? But I think this will help me a lot in understanding business.:)

Watch out for my next post!


  1. I think Business Math is a very relevant to any course!Mad props to this blog!looking forward to your next posts!:)

  2. Wow I love your post! I feel like becoming an entrepreneur now. Thank you! This was really helpful! :D

  3. Thanks for sharing! Business Math is a lot to take indeed. But with a good and brief explanation, its easy to catch up. Learning the subject's basic terms is a good start to get to know the topic :)

  4. Thank you for sharing and pointing this out. I think it would greatly help a lot of people interested in entering a business. Thumbs up!

  5. Wow this will help people who wants to start a business. thank you! :)

  6. Thank you for sharing with us what you've learned in Business Math. Indeed, this will help those who are still clueless with profit and loss.

  7. Thank you for posting last week's lesson! This is really helpful!

  8. This is a very nice blog! Thanks for sharing your thoughts and knowledge. I'm looking forward to your next blog posts. Love you!

  9. I love this blog. It really helped me a lot. I have now realized my full potential on becoming a business man. Hark! I might start my own business because of this. My future, has been seriously set in stone because of the help i got from this blog. Thank you so much Fashion Mathgirl!

  10. Thank you so much! What an informative blog! Waiting for the next ones! Cheers :)

  11. Thanks for sharing the formulas and for defining the terms as well. This definitely makes life easy! For those who are into business, this is a big help :)

  12. Thanks for this post :) This is very simple and easy to understand.

  13. thanks to this post, i will now easily understand business math :D