Business Math For Dummies

Book Preface

Business and mathematics — they just seem to go together. Of course, I could make a case for any topic to successfully mesh with math. Then again, I’m a bit prejudiced. But you have to agree that you can’t do much in the home or in the business or real estate worlds without a good, solid mathematical background. I became interested in writing Business Math For Dummies because of Jon, one of my children. He works with real estate agents and managers, and over time he heard a recurring complaint: This or that agent hadn’t done math in a long time and couldn’t remember how to do the proper computations. Sure, computers and calculators do the actual arithmetic, but you have to know what to enter into the computer or calculator. Finding the area of a circular garden isn’t terribly difficult if you know how to use the formula for the area of a circle, but it can be tricky if you haven’t used that formula in a long time. For instance, you may not remember what pi is (and I don’t mean the apple or cherry variety). And who would have thought that you’d ever need to solve a proportion after you grew up and got a job? The math in the business world isn’t difficult, but it does take a refresher or a bit of relearning. And here you find it — all in one spot.

In this book, you find tons of mathematical explanations coupled with some sample business or financial problems. I show you the steps used in the math and explain how the answers help you complete a transaction or continue on with a project.

About This Book

In your business, you probably have all sorts of specialized procedures and formulas. And you’re probably pretty good at what’s particular to your situation. So what you find in this book is all the background info for more specialized material. I show you how to do financial computations that use simple formulas along with other more-involved formulas. You’ll find geometric structures and patterns and uses of fractions, decimals, and percents. Having said all that, I doubt you want to read this book from cover to cover.

After all, no snooze alarm is loud enough to rouse you if you attempt a frontto-back read. But if you love math that much, please feel free to make this a pleasure read. However, most folks simply will go to those topics that interest or concern them.

This modularity is what’s so great about this book. You can jump backward or forward to your heart’s delight. In fact, I refer to earlier material in later chapters (if I think it would help explain the topic at hand), and I titillate you early on with promises of exciting applications further on as you read. In other words, you’ll find the organization to be such that you can quickly turn to the pages you need as you need them.

Please use this book as a reference or a study guide. You don’t want to memorize the formulas and procedures shown here. If you did, your head would surely burst.

Conventions Used in This Book

This book is designed to be user friendly. I’m guessing that you’re too busy to have to hunt up a dictionary if a word isn’t familiar or to poke around for a formula (and how to use it) if you need to determine an item’s markup or a loan’s payment amount.

So as you read this book, you’ll see important terms highlighted with italics, and I always include a definition with these terms. Boldfaced text highlights keywords of bulleted lists and the actions you must take in numbered steps. Also, when a process requires a formula, I state the formula and identify all the letters and symbols.

What You’re Not to Read

Occasionally in this book you’ll see some material accompanied by a Technical Stuff icon. And you’ll come across some sidebars, which are those gray-shaded boxes with interesting but nonessential information. You’ll find these items when I just couldn’t help myself — I had to tell you about some mathematical property, geometric eccentricity, or financial feature because
I found it to be so fascinating. Do you need the information in order to understand the process? No. Will it enlighten you and make your world a better place? Well, of course. You can take them or leave them; pass them by today and come back to them in the future — or not.

Contents at a Glance
Introduction ………………………………………………………..1
Part I: Reviewing Basic Math for Business
and Real Estate Transactions ………………………………….7
Chapter 1: Starting from the Beginning ………………………………………………………………..9
Chapter 2: Fractions, Decimals, and Percents …………………………………………………….15
Chapter 3: Determining Percent Increase and Decrease ……………………………………..31
Chapter 4: Dealing with Proportions and Basic Algebra ……………………………………..37
Part II: Taking Intriguing Math to Work ………………….47
Chapter 5: Working with Formulas ……………………………………………………………………..49
Chapter 6: Reading Graphs and Charts ………………………………………………………………67
Chapter 7: Measuring the World around You ……………………………………………………..79
Chapter 8: Analyzing Data and Statistics ……………………………………………………………97
Part III: Discovering the Math of Finance
and Investments ………………………………………………109
Chapter 9: Computing Simple and Compound Interest ……………………………………..111
Chapter 10: Investing in the Future …………………………………………………………………..131
Chapter 11: Understanding and Managing Investments ……………………………………149
Chapter 12: Using Loans and Credit to Make Purchases ……………………………………165
Part IV: Putting Math to Use in Banking
and Payroll …………………………………………………….177
Chapter 13: Managing Simple Bank Accounts …………………………………………………..179
Chapter 14: Protecting Against Risk with Insurance ………………………………………….193
Chapter 15: Planning for Success with Budgets ………………………………………………..207
Chapter 16: Dealing with Payroll ………………………………………………………………………223
Part V: Successfully Handling the Math
Used in the World of Goods and Services ……………….235
Chapter 17: Pricing with Markups and Discounts ……………………………………………..237
Chapter 18: Calculating Profit, Revenue, and Cost ……………………………………………251
Chapter 19: Accounting for Overhead and Depreciation …………………………………..273
Chapter 20: Keeping Track of Inventory …………………………………………………………..291
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Part VI: Surviving the Math for Business Facilities
and Operations ………………………………………………..305
Chapter 21: Measuring Properties ……………………………………………………………………307
Chapter 22: Taking Out Mortgages and Property-Related Loans ……………………….335
Part VII: The Part of Tens …………………………………..359
Chapter 23: Ten Tips for Leasing and Managing Rental Property ………………………361
Chapter 24: Ten Things to Watch Out for When Reading Financial Reports ………369
Index ……………………………………………………………..373