REASON FOR USING MATHEMATICS IN BUSINESS

Topics: Inventory, Business, Balance sheet Pages: 2 (720 words) Published: August 30, 2014
REASONS FOR USING MATHEMATICS IN BUSINESS
There are so many factors that contribute to the success of business enterprise in order to achieve its intended goals. However, the use of mathematics is paramount as far as business success is concerned. Therefore, in my essay, I am going to discuss the reasons for using mathematics in business enterprises focusing on areas of business investments, budgeting, product pricing, sales forecasting & monitoring and business analysis. Firstly, mathematics is used for ascertaining the viability of business investments. Success of the business enterprise depends on its wise decisions on investments. This involves a lot of mathematics before the decision is finally reached whether the business should invest or not. For example, if the business wants to invest in the fixed asset costing K1, 000, 000.00 at present value having economic life of five years, the first thing is to ascertain the future inflows that the asset in question shall bring at the present value, for example if the future inflows will be K150, 000.00 per year at present value for five years, the investment is deemed not viable because at the end of five years, the total inflow will be K750, 000.00 at present value which less than the initial cost of K1, 000, 000.00. This tiresome job is mathematical in nature. Secondly, mathematics is used when formulating budgets for the business enterprise. This is a financial plan of how the business enterprise would operate in order to meet its strategic objectives as set out by top management. This task of quantifying specific tasks is all mathematics. Poor formulated budget negatively affect the overall objectives of an organization as individual tasks, collectively contributes towards those objectives. Furthermore, mathematics is used when ascertaining the price of the product. Pricing a product correctly is very fundamental as far as profitability and continuity of the business enterprise is concerned. Pricing a...
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