And So, We Meet Again

Math, a word that doesn’t usually excite students. I t has been labeled as difficult, stressful and boring. I know because I’ve been through that stage.  Though I did miss math. Since college, we haven’t had a legit subject that involves numbers or solving problems for that matter. But this year, I’m welcoming math back into my life.

Business math. Well, at first I thought it was really boring. I mean it sounds so grown up-ish.  But then I believe that this subject would be of great help in the future. Especially for those who want to put up their own business.

Our professor seems to be very intelligent and easy to approach. This is a good thing because honestly, I ask questions a lot. Another factor that motivates me to attend class is my block mates. Math class would definitely be fun with them. Our class has a lot of intelligent students you know.

Now, let me share with you something I learned from our class last June 14, 2012. We discussed about Profit and Loss.Profit, by definition is the amount by which the sales are greater than the cost of goods sold and the operating expenses. Margin also means gain or profit.

                

The formulas in computing profit are as follows;

Net Sales = Gross Sales – Refunds and Allowances

                        Net Profit = Gross Profit – Operating Expenses

The net sales and profit may also be given in scheme diagram as follows:

                                    Gross Sales

                                -   Sales Returns and Allowances

                                    Net Sales

                                -   Costs of Goods Sold

                                    Gross Profit

                                -   Operating Expenses

                                    Net Profit

We also discussed the definitions of the following: Gross Sales, Refunds, Net Sales, Costs of goods sold or buying price. Gross Sales is the actual amount received for selling the goods. Refunds are amounts returned usually if goods are defective.Net sales are obtained when refunds are being deducted from the gross sales. Costs of goods sold or buying price is the amount paid for articles bought including the buying expenses.

To compute for the cost of goods sold for a period of time, we have the formula as follows:

                Available Goods = Beginning Inventory + Purchases

                Costs of Goods Sold = Available Goods – Ending Inventory

The above may be diagrammed as follows:

                                   Beginning Inventory

                                + Purchases

                                   Goods For Sale

                                -  Ending Inventory

                                   Costs of Goods Sold

We also discussed the meaning of Inventory, Gross profit, Operating expenses, and Net profit. Inventory is an itemized lists of goods on hand. Gross Profit is the difference between the net sales and the cost of goods sold. Operating expenses or overhead are selling expenses such as salaries or wages, traveling expenses, rentals, water, electric bills, commissions, taxes. Net Profit is the amount obtained when all the selling expenses or other cost of doing business are deducted from the gross profit.

In case the sales are less than the cost of goods sold, there is a loss. The formulas in computing losses are as follows:

                                Gross Loss = Costs of Goods Sold – Net Sales

                                Net Loss = Gross Loss + Operating Expenses

The relationship of the terms of loss may be diagrammed schematically as follows:

                                    Cost of Goods Sold

                                 -  Net Sales

                                    Gross Loss

                                +  Operating Expenses

                                    Net Loss

One of the things I missed about math is solving problems. Yes, it sounds difficult but I like it. I like the feeling of being challenged. During class, before we got dismissed, our professor made us answer 2 problems. Of course most of us got it right and got a perfect score. I’m looking forward to learn more about Business math. Definitely saying, challenge accepted.

Checked by: Prof. Crisencio Paner