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Economy

The document discusses several important math equations and formulas commonly used in business: profit margin, which measures profitability as a percentage of revenue; break-even point, which is the point where revenue equals costs; debt-to-equity ratio, which measures financial leverage; return on investment (ROI), which measures investment efficiency; and time value of money, which accounts for money being worth more presently than in the future due to interest earning potential. Formulas for calculating each are provided.

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29 views3 pages

Economy

The document discusses several important math equations and formulas commonly used in business: profit margin, which measures profitability as a percentage of revenue; break-even point, which is the point where revenue equals costs; debt-to-equity ratio, which measures financial leverage; return on investment (ROI), which measures investment efficiency; and time value of money, which accounts for money being worth more presently than in the future due to interest earning potential. Formulas for calculating each are provided.

Uploaded by

icarus
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as RTF, PDF, TXT or read online on Scribd
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Sure!

Here are some important math equations and formulas that are commonly used in business:

Profit Margin: This is a measure of profitability that shows the percentage of revenue that a company
keeps as profit after accounting for all of its expenses. It is calculated as follows:

Profit Margin = (Revenue - Costs) / Revenue

Break-Even Point: This is the point at which a company's revenues equal its costs, and the company
starts to make a profit. It is calculated as follows:

Break-Even Point = Fixed Costs / (Price - Variable Costs)

Debt-to-Equity Ratio: This is a measure of a company's financial leverage, and it shows the
proportion of debt to equity that the company has. It is calculated as follows:

Debt-to-Equity Ratio = Total Debt / Total Equity

Return on Investment (ROI): This is a measure of the efficiency of an investment, and it shows the
percentage return on an investment over a given period of time. It is calculated as follows:

ROI = (Gain from Investment - Cost of Investment) / Cost of Investment

Time Value of Money: This is a concept that takes into account the fact that money is worth more in
the present than it is in the future due to the potential for earning interest. The time value of money can
be used to compare investments or to determine the present value of a future payment. It is calculated
using the following formula:

Present Value = Future Value / (1 + Interest Rate)^Number of Periods


I hope this helps! Let me know if you have any questions.

. Sure! Here are some important math equations and formulas that are commonly used in business:

Profit Margin: This is a measure of profitability that shows the percentage of revenue that a company
keeps as profit after accounting for all of its expenses. It is calculated as follows:

Profit Margin = (Revenue - Costs) / Revenue

Break-Even Point: This is the point at which a company's revenues equal its costs, and the company
starts to make a profit. It is calculated as follows:

Break-Even Point = Fixed Costs / (Price - Variable Costs)

Debt-to-Equity Ratio: This is a measure of a company's financial leverage, and it shows the
proportion of debt to equity that the company has. It is calculated as follows:

Debt-to-Equity Ratio = Total Debt / Total Equity

Return on Investment (ROI): This is a measure of the efficiency of an investment, and it shows the
percentage return on an investment over a given period of time. It is calculated as follows:

ROI = (Gain from Investment - Cost of Investment) / Cost of Investment

Time Value of Money: This is a concept that takes into account the fact that money is worth more in
the present than it is in the future due to the potential for earning interest. The time value of money can
be used to compare investments or to determine the present value of a future payment. It is calculated
using the following formula:

Present Value = Future Value / (1 + Interest Rate)^Number of Periods

I hope this helps! Let me know if you have any questions.

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