Why studying business math is important for you!

   Importance of business math 

   

Many business students don't like having to study at least two business math courses in their program. Many students think that studying mathematics is irrelevant to the business program because mathematics has no application in the business world besides addition and subtraction, which even a child could do. However, this is far from reality as business math plays a huge role in any organization's success. To understand the importance of business math, first, need to understand what is it exactly?

what is business math?

we have a term called " pure mathematics" which is the study of mathematical terms itself. for example,  studying differentiation or arithmetic and the geometric sequence would count as "pure metamathematics" but using mathematics in physics would be called its application. likewise, application of math could be applied to solve business problems, and math used to solve business problems is called business math. Now we would see where business math can be used to solve business problems.

where business math can be used?

Economics: Mathematical concepts such as calculus are very crucial in learning managerial economics. Calculus is used in managerial economics to calculate what quantity produced would yield the greatest profit. It is done by differentiating the profit function and putting equal to zero. Also, the double derivative should be less than zero for the answer we got from the first derivative.

Also, mathematics is used in demand forecasting. One of the ways through which demand is calculated is regression analysis which determines the average relationship between dependent and independent variables.

Finance: mathematics is used in finance to calculate various things such as simple and compound interest. Math has made work easy by the use of inventing formulas to determine how much in total interest would be compounded after 'n' years if a bond is issued today.

financial statement analysis uses the principles of mathematics to determine a company's financial health. we use the concept of ratios such as liquidity ratios and profitability ratios to calculate how much the company is financed by debt, how much it is financed by equity, and how much profit is earned on one unit of sale.

operations management: Effective inventory management is critical for organizations to reduce expenses while maintaining acceptable stock levels. Businesses can streamline their stock management procedures by using business math to calculate inventory turnover, reorder points, economic order quantity (EOQ), and safety stock levels.

concepts of math are used to calculate multi-factor and labor productivity which are used to measure how efficiently are the operations being run. Also in decision-making under the risk concept of probability is used to calculate the expected monetary value(EMV) which helps determine which alternative to choose.

Marketing: Math is used in designing and analyzing A/B testing, which evaluates different versions of a marketing campaign or website to discover the most effective method. Marketers can use statistical significance testing to examine whether observed differences in response rates or conversion rates are statistically significant or due to random variation.