Administrative Assistant / Secretary: The Basics of Business Math

There are a variety of business-related math formulas that may be used by administrative assistants when preparing documents or correspondence. While it is not difficult to calculate these formulas manually, most likely you will use a calculator or spreadsheet such as Microsoft Excel.
In addition to calculations, numerical data in a spreadsheet can be easily converted to attractive graphs and charts for use in your documents and presentations.

Using a Calculator
Calculators are fairly simple to use except when working with negative numbers and more complex formulas involving exponents. Whether you use a physical calculator or a software calculator on your computer, all calculators have four basic operations and each has its own button. The + (plus) button is for addition, while the – (minus) is for subtraction. The × (times) or * (asterisk) is for multiplication, while the ÷ (division sign) or / (slash) is for division.

Simple Arithmetic
To add numbers, enter the first number, then press the + button followed by the second number. Some calculators will automatically add the two numbers at that point; however, some units require that you press the = (equals) button or an ENTER button.
Subtraction works the same way. If you want to subtract one number from another number, enter the number you want to subtract from first, then press the ÷ button.
Multiplication is handled just like addition. To multiply two numbers, enter the first number, then press the × or * button, followed by the second number.
When you want to divide one number by another, enter the number you want to divide, press the ÷ or /, and then enter the number you want to divide by.
For more complex calculations, most calculators also have a memory function that will save the result of your first calculation and allow you to recall it later.

Calculations Involving Negative Numbers
The subtraction symbol (–) is used for operations on a calculator. When working with formulas that involve negative numbers (such as –5), a calculator can get confused if you use the subtraction symbol to designate a negative number. To solve this problem, many calculators have a negative key in addition to the subtraction symbol.

Using a Spreadsheet
Computer spreadsheets like Microsoft Excel allow you to perform calculations on large groups of numbers with relative ease. With a spreadsheet, you can do everything you can with a calculator.

For example, you can easily add a column of numbers and create complex formulas with variables in parentheses.

You can also copy and paste data and formulas to repeat the same operations over and over without having to rekey the data or the formulas.

Summing a Row or Column of Numbers
There is an automatic feature built into Microsoft Excel 2010 that will allow you to add a row or column of numbers. Just place your cursor in the cell where you want the sum to appear, and then from the Home tab ribbon bar, click AUTOSUM and then press ENTER on your keyboard. If you need to enter a more complex formula, start by adding the command =SUM (, followed by the formula, and then close the parentheses.

The following is an example:
= sum(A1+B2)

Fractions, Decimals, and Percentages
Fractions, decimals, and percentages are closely related. For example, every fraction can also be written as a percent. To convert from a fraction to a percent, you first must convert the fraction to a decimal. To convert a percent to a fraction, you must first convert the percent to a decimal.

Converting Fractions to Decimals
Converting from a fraction to a decimal is fairly simple. Divide the top number of the fraction by the bottom number. For example:
¼ = 1 ÷ 4 = 0.25
If the result of the division is a repeating decimal, such as 0.3333, you can round the decimal to the nearest decimal point depending on the accuracy desired.

Rounding Decimals
Sometimes when converting a fraction to a decimal, you may end up with a repeating decimal such as .03333 whereby the 3’s go on forever. Or, you may not need the accuracy of a decimal that goes beyond one hundredth-thousandth.
You can round off decimals to the nearest tenth, hundred, thousandth, and so forth. The best rule for rounding up or down is based on which method will create a decimal ending in 0, 2, 4, 6, or 8.

Decimal Places
The decimal places to the right of a decimal point can be described according to the following list:
 

Converting Decimals to Fractions
To convert a decimal into a fraction, use the descriptions above to create a fraction in words, then convert that fraction to numbers.

For example, 0.25 is 25 hundredths because it is two places to the right of the decimal. You can then write that as the fraction 25/100.

To reduce the fraction to its lowest terms, divide both the top number (numerator) and the bottom number (denominator) by the same number. In this case:
25 ÷ 25 = 1
100 ÷ 25 = 4
So the resulting fraction is ¼.

Percent and Decimals
A percent is a number that describes how much something is compared to 100. A percent is often easier to understand than a fraction, although the two may be equal. For example, ½ and 50% are the same amount.
To change a percent to a decimal, move the decimal point in the percent two places to the left and remove the percent sign.

For example:
25% would be 0.25

To change a decimal to a percent, move the decimal point two places to the right and add a percent sign.

For example:

0.50 would be 50%

Adding and Subtracting Fractions
You can add or subtract fractions only when they have the same denominator (bottom number). Thus, in order to perform the calculation you must first convert the fractions so they have the same denominator. This is done by converting a fraction to the equivalent multiple.

For example, the multiples of ¼ are , , , and so on.

When adding or subtracting fractions, once the fractions have been converted so they all share the same denominator, perform the calculation on the numerator (top number) and keep the denominator the same.

For example:
⅔ + ½ would be + =

Converting Whole Numbers to Fractions
Whole numbers like 1, 2, 3, and so forth can be converted to fractions by just placing them over 1 as the denominator.

For example:
1 is , 2 is , and 3 is

Adding or Subtracting Mixed Numbers
Mixed numbers are whole number/fraction combinations. For example, 1½ is a mixed number.
To add or subtract mixed numbers, first convert the mixed number to a fraction and then follow the normal rules for adding or subtracting fractions.

For example:
1½ is the same as

Multiplying and Dividing Fractions
When multiplying fractions, you do not need to convert the fractions so they have the same denominator. Instead, you can perform the calculation across the top and then across the bottom. For example:
⅔ × ½ = or, 2 × 1 = 2, 3 × 2 = 6
When dividing fractions, you convert the problem to a multiplication problem and flip the second fraction. For example:
÷ ½ is converted into × =

Graphs and Charts
Graphs and charts can convert tables of numbers into meaningful images that are easy to interpret. The most common types of graphs are scatter plots, line graphs, bar graphs, and pie charts.
The simplest way to create a graph or chart is to use a spreadsheet such as Microsoft Excel. For information on how to create these visual aids, read Using Microsoft Excel.

Scatter Plot
With a scatter plot, the numbers are represented as dots distributed on a graph with two measurement axes. Scatter plots often involve measurements taken over time.

For example, the number of sales per hour or day, the output of machines over time, or the number of defects per day, can all be represented as scatter plots. 

Line Graph
A line graph consists of a series of connected data points that show the number of occurrences over a period of time. The lines in a line graph make it easy to see trends in the data. A line graph has two axes that use different numbering systems, so that two values can be compared.

For example, the value of a business over time could be measured using a line graph. One axis would be the value, while the second axes would be time. 

Bar Graphs
Bar graphs are often called histograms. They are used to measure the frequency of different categories of data. For example, a bar graph could be used to show the sales of a group of different products. A bar graph usually has just one axis for the particular thing being measured, while the other axis is for the different categories. A bar graph makes it easy to see the relationships between the individual categories being compared. 

Sample scatter plot:



Sample line graph:



Sample bar graph:



Pie Charts
Pie charts are used to show how much a particular category is compared to the whole. The whole is represented as a circle and each category is a wedge-shaped piece of the circle. For example, the various products or services offered by a business could be compared using a pie chart to see how much each contributes toward total sales. 

Business Calculations
There are a variety of calculations that an administrative assistant may need to perform while preparing business documents. These include simple calculations involving statistics, financial calculations, payroll-related formulas, and measurements.

Averages
The average of a group of numbers is the sum of the numbers divided by the number of numbers that have been added together. For example, the average of 1, 2, 3, 4, 5, 6 is 1 + 2 + 3 + 4 + 5 + 6 divided by 6.

Simple Interest
The formula for computing simple interest earned on a particular amount of money is as follows: Simple interest equals the principal (the amount of money invested) times the rate of the interest (written as a decimal), times the amount of time (usually in years if the interest rate is a yearly rate).

The formula for this is:
I = Principle × rate × time.
For example, the simple interest earned on $150,000 at 5% is $7500.
150,000 × .05 × 1 = 7,500

Sample pie chart:



Paycheck Calculation
Salaried employees receive a set amount of money each pay period, in addition to the potential for bonuses that may be paid in one particular pay period. To calculate the monthly gross pay before deductions, first determine the number of pay periods in the year. For example, if someone is paid twice a month, that is twenty-four pay periods. Then, divide the total yearly salary amount by the number of pay periods to determine the gross pay per pay period.

For example, Joanne earns $50,000 per year at a company with 24 pay periods.
50,000 ÷ 24 = 2083.33

Commissions
Commissions are amounts earned by sales people based on the amount of their sales. Usually, a commission is a percentage of the total amount sold. Thus, to calculate a commission payment for a salesperson, take the amount of the sales and multiply it times the commission percentage, written as a decimal.

For example, Laura sold $28,000 this month and earns a 12% commission. Therefore:
28,000 × .12 = 3360

Markup Pricing
For retail stores or stores that resell parts to customers, the cost of the product is marked up by a certain percentage or amount to determine the selling price.

The calculation for this is:
Cost + markup in dollars = selling price.
If the markup is a percentage, then calculate the markup by multiplying the cost times the markup percentage expressed as a decimal.

For example, a part costs $32 and the markup is 25%:
32 × 0.25 = 8 (the markup in dollars).
thus, the retail price would be 32 + 8 = 40.

Discount Pricing
Sometimes prices are discounted for special customers or when the business has a sale. To determine the discounted amount, take the retail price and multiply it times the discount percentage expressed as a decimal. Then, subtract the discount amount from the retail price to determine the discount price.

For example, customer A gets a 25% discount on all his purchases. If the customer wants to purchase a product that retails for $64, then the discount is 64 × 0.25 = 16 (discounted amount). The discount price would be:
64 – 16 = 48.

Profit
A company’s profit is the amount of money the business has left over after paying for goods or services and other expenses related to running the business. To calculate profit, take the total revenue and subtract the cost.

For example, a business earns $125,000 in revenue and has $82,000 in expenses that include salaries, cost of products purchased for resale, and other expenses. Profit would then be:
125,000 – 82,000 = 41,000

Area
Area is a measurement of space.

The most common area formula is:
Area = length × width.

For example, suppose the area of a piece of land is 200 feet by 100 feet. The area is:
200 × 100 = 20,000 square feet

Acreage
Acreage is calculated similarly to area, with one acre being 41,560 square feet.