104.Sales to Current Debt
105.Analysis of Expenses
106.Can You Cover Interest Payments?
107.Operating Leverage
108.Fixed-Charge Coverage
109.Is Your Funds Flow Adequate?
110.Discretionary Cost Ratios
111.“Z-Score” Model: Forecasting Business Failure
Part 11 Measuring Business Performance
112.Choosing Profitability Goals
113.Simple (Accounting) Rate of Return
114.Return On Total Assets
115.Residual Income
116.Flexible-Budget Variance
117.Variance between Actual Sales and Budgeted Sales
118.Variance between Actual Costs and Budgeted Costs
119.Price Variance
120.Quantity Variance
121.Salesperson Variances
122.Warehouse Cost Variance
123.Incremental Cost and Incremental Revenue
Part 12 Averages, Expectations, and Variability in Business Activities
124.Averages (Means): Simple and Weighted
125.Median and Mode
126.Expected Value and Standard Deviation
127.Coefficient of Variation
128.Normal Distribution
Part 13 Adequacy and Cost of Insurance Coverage
129.Determining How Much Insurance Is Needed
130.Factoring in Coinsurance and Copayment
131.Evaluating Insurance Risk
132.Estimating the Value of a Claim
Part 14 Hiring and Compensating Employees
133.Permutations and Combinations
134.Sizing up Human Resource Needs
135.Calculating the Cost of a Fringe Benefits Program
136.Determining Profit-Sharing Bonus
137.Employee Efficiency
Part 15 Buying or Selling a Business
138.Determining How Much Your Business Is Worth
139.Valuing a Franchise
Table 1: The Future Value of $1 (Compound Amount of $1) = T1 (i, n)
Table 2: The Future Value of an Annuity of $1 (Compound Amount of an Annuity of $1) = T2(i,n)
Table 3: The Present Value of $1 = T3 (i, n)
Table 4: The Present Value of an Annuity of $1 = T4(i, n)
Table 5: Monthly Installment Loan Payment
Table 6: Area in the Right Tail of a Chi-Square (χ2) Distribution
Table 7: Normal distribution table: Area under the normal curve
Table 8: t-Distribution Table: Value of t
The Art of Mathematics in Business provides managers and entrepreneurs with the information, analysis, and insights necessary to analyze and calculate the consequences of a wide range of business financial strategies and problems. The ability to select the right operational technique is vital if the business is to survive, profit, and grow in today’s uncertain economic environment. The manager and entrepreneur of a business must be able to make the right financial decision based on sound mathematical reasoning in order to run the business efficiently. He or she must understand the problem, and then apply math skills to solve it.
This book is a comprehensive, one-stop desk reference for managers and owners of businesses who must use quantitative calculations to make daily operating and investing decisions. Its purpose is to provide the fundamentals of business math techniques that can be quickly applied to real-word problems. This unique resource will save countless hours of research time by making sound financial planning truly easy. It provides analyses as well as clear and understandable explanations of complex business problems. Basic mathematical techniques are presented in a step-by-step fashion that takes the reader through each stage of the problem-solving process. The examples in this book provide an invaluable and effective operating tool. This book also contains user-friendly personal computer techniques. The examples enable the businessperson to measure results and to report the data in an easy-to-understand format.
Each section begins with an overview of the mathematics necessary to solve the problem under discussion. The presentation of the data will enable the business owner to select and use the appropriate statistical method to make cost-effective and profitable business decisions. The language associated with the mathematical techniques can also be adopted by the manager when circumstances require communication with investors, lenders, vendors, customers, employees, and other
parties associated with the enterprise. Each business math tool is illuminated in the following, step by step fashion:
The objectives and methods illustrated in this book cover a wide range of areas, including management, marketing, accounting, taxes, finance, operations, insurance, and economics. This book provides solutions to traditional as well as new operating and financial problems created by today’s uncertain economic environment. It also advises the business manager and/or business consultant about ways to respond to sudden and unexpected problems. Complex business problems are broken down into smaller ones for easier solution.
This book is divided into parts, each of which covers an area that is important in starting and running a business. Part topics include managing cash and inventory, evaluating loans and credit, researching the market and competition, and preparing financial statements. Each part is broken down into sections. For example, budgeting and profit planning