INSTITUTE OF ACCOUNTANCY ARUSHA

MODULE NAME: Business Mathematics and Statistics(ACT 05104)

PROGRAMS: ODA 2024/2025

LECTURE NOTES NO. 1

NUMBER SYSTEM
A. NUMBER: Is an arithmetic value used to represent a particular quantity. In
Mathematics, the different types of numbers are:
(i) Natural numbers: Are counting numbers starting from 1,2,3, ... Are the most familiar
numbers. They are symbolically represented by N.
(ii) Whole numbers: Are natural numbers together with 0. That is, 0, 1, 2, 3, 4, 5, 6, ....
Natural numbers are subset of whole numbers. Sum of two natural numbers is a natural
number. Also, product of two natural numbers is a natural number.
(iii) Integers: Are set of numbers consisting of natural numbers, negative numbers, and
zero. Natural numbers without zero are called positive integers and when written with
a negative sign are called as negative integers. The set of integers is represented by
the symbol Z.
(iv) Rational numbers: Are fractions with an integer numerator and a positive integer in
p
the denominator. They are represented in the form of q
where p and q are integers

and q is not equal to zero.

(v) Irrational numbers: Are numbers that cannot be written as fractions. That is,
p
cannot be written in the form of q
. It is a never ending number and does not repeat itself

in the decimal form. Example: π = 3.14159…., √3 = 0.121221222………………

(vi) Real numbers: Are set of rational and irrational numbers. Represented by the
symbol R.
Properties of Real Numbers
Properties Example
Distributive Property a × (b + c) = a × b + a × c 3 × (3 + 4) = 3 × 4 + 3 ×
5
Commutative Property of Addition a + b = b + a 3+4=4+3

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 Commutative Property of Multiplication a × b = b × a 3×4=4×3
Associative Property of Addition a + (b + c) = (a + b) + C 3 + (4 + 5) = (3 + 4) + 5
Associative Property of Multiplicative a × (b × c) = (a × b) × 3 × (4 × 5) = (3 × 4) × 5
c
Additive identity Property a + 0 = a 4+0=4
Multiplicative identity Property a × 1 = a 4 ×1 = 4
Additive Inverse Property a + (-a) = 0 4 + (-4) = 0
1 1
Multiplicative inverse Property a × a = 1, a ≠ 0 4×4=1

B. FRACTIONS, DECIMALS AND PERCENTAGES CONCEPTS

Fraction: Is a quantity that represents part of a whole. Fractions are written in the form
a 5 1 9 13
of one number over another, i.e example: 8, 4, 7, 10 , etc. The number above the line is
b

called Numerator and the number below line is called Denominator. Example in the
2
friction: 3, the numerator is 2 and the denominator is 3.

Types of Fractions: There are three types of fractions, these are:

i. Proper fractions: Have the numerator value less than the denominator value. E.g.
2 14 3
, ,
3 15 4

ii. Improper fractions: Have the numerator value greater than or equal to the
17 19 7
denominator value. E.g. , ,
13 14 7
2 5 5
iii. Mixed numbers: Have the whole number and the proper fraction. E.g 5 3, 3 8, 9 7

Converting mixed numbers into improper fractions.

A mixed number can be converted into an improper fraction by multiplying the
denominator of the fraction part to the whole number part then add the product to the
numerator, the sum obtained is the numerator of the new improper fraction while the
5
denominator stays the same. For example to convert 4 to improper fraction, multiply 8
8

by 4 which gives 32 then add 32 to 5 which gives 37 therefore the numerator of the new
5 37
improper fraction is 37 and the denominator is 8. Therefore, 4 8 = 8

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Converting improper fractions into mixed numbers.
To convert improper fractions into mixed numbers, divide numerator of the improper
fraction by the denominator. The quotient obtained is the whole number part of the
mixed number and the remainder is used as the numerator of the fraction part. The
17
denominator stays the same. For example convert 5
to a mixed number by dividing
2
17 by 5. This gives: 3 7

Fraction in its lowest terms: If both numerator and denominator of fraction cannot be
divided without a reminder by any number other than 1 the fraction is said to be in its
5
lowest terms. For example is in its lowest terms as 5 and 7 cannot be divided without a
7
4 12 13
remainder by a number other than 1, the same way 11
, ,
17 15
, etc. But when both

numerator and denominator can be divided without a remainder by numbers other than
15 15÷5 3
1 the fraction is said not to be in its lowest terms. For example = = lowest
25 25÷5 5

term.
Operations with Fractions
i. Addition and Subtraction
Fractions of the same denominator. Such fractions are said to have a common
2 3
denominator. For example 7
and 7
are like fractions with common denominator 7.

Addition and subtraction of like fraction is done by adding or subtracting the numerators,
and then place the results over the common denominator.
Example 1:
2 3 2+3 5
 7
+7= 7
=7
5 3 5−3 2

13
- 13 = 13
= 13

Example 2: (To be discussed by students)

1. Use the method of prime numbers to find the least common denominator (LCD for
5 7 11
12
, 18 and 20
11 7 7 5
2. Add or subtract (i) 16
+ 12 (ii) 8 - 12
3 4
3. Add 1 and 2
8 5

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 1 2 3 1 7
4. Subtract 33 from 49 5. Subtract 6 4 from 10 8 (ii) Subtract 15 12 from 41

Example 3: (To be discussed by students)

2 5 1 2
1. Evaluate 3
x 8
2. What is the product between 6 4 and 2 3

Decimals: are one of the types of numbers, which have two parts; whole number and
the fractional part. They are separated by a decimal point. The dot present between the
whole number and fractions part is called the decimal point. For example, 34.5 is a
decimal number.
The relationship of the place values of digits on the either side of the decimal point is in
such a way that, if you move the digit to the left side of the decimal point by place (ones,
tens, hundred, and so on) you increase its value 10 times. If you move the digit to the
right of the decimal point by place (tenths, hundredths, and so on) you decrease its
value 10 times. This is why the decimal point is the center of the decimal number
system. For example:
2.4, the 4 is in the tenths;
4 in 2.04 is in the hundredths
4 in 2.004 is in the thousandths
4 in 2.0004 is in the ten thousandths

Rounding Decimals: Rounding decimals involves the following steps:

(i) Identify the place value of the digit you want to round.
(ii) If the digit to the right of the identified digit in (i) is 5 or more, increase the identified
digit by 1. If the digit to the right is less than 5, don't change the identified digit.
(iii) Drop all the digits to the right hand of the identified digit.
Example 4: (To be discussed by students)
1. Round 0.3272727 nearest to hundredths.
2. Round 0.3272727 nearest to thousandths.
3. Round off 24. 11760 nearest to:
a. Tens b. Ones c. Tenths d. Hundredths e. Ten thousandths
Operations with Decimals: Under this part we discuss the manipulation of decimals
using signs; subtraction (-), addition (+), multiplication (×) and division (÷).

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Let us discuss the following problems to illustrate how the operations of
decimals can be done.
1. Add 0.4 + 7.3 + 36.139 + 0:0007 + 8.22 2. Subtract 45.3 - 15.273
3. 2.36 × 0.016 4. Divide 32.8 ÷ 2.5
Fraction and Decimal Conversions.
Quiz:
12 10 18
1. Convert 1000
, 1000
, and 10000
into decimals
1 7 11 18
2. Convert the following fractions into a decimal: , , and
4 8 20 25
2 4 2
3. Change the following mixed fractions into a decimal: 1 5, 3 4, 5 3

4. Convert 0.3, 0.24 and 17.45 into a fraction

5. Change the following decimals into a fraction: 1.45, 0.405, 22.4 and 0.005

Percentages (or Percent): Are widely used in everyday life. For example, interest rates
in savings and investment, auto mobile loans, home loans and other installment loans
are almost always given in percentages. Stores often advertise sale prices as being a
certain percent of a regular price. In business, marketing cost, damage and theft may be
expressed as percent of sales. Profit as percent of investment, labour as percent of cost
of production, current government figures about inflation and unemployment are also
reported as percent.
Definition: Percentages represent part of a whole, just as fraction or decimals do.
Percents are hundredths or part of hundredths or part of hundred. Therefore one
percent means one (1) part of 100 equal parts. Percent are written with percent sign
25
(%). For example, 25% refer to 25 parts out of 100 equal parts ( ), 50% refer to 50
100
50
parts out of 100 equal parts (100).

Three Components of Percent Problems: Problems in percent contain three main

components. Usually two of these components are given, and the third component must
be found. The three key components in percent problems are BASE (B), RATE(R) and
PART (P)

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BASE (B): This is the whole or total quantity (100%). It is a starting point or is that to
which something is being compared.
RATE (R): Is a number followed by a % sign or is simply a percent.
PART (P): This is a result of multiplying the base and the rate (B × R = P)

Example 5: Round table Pizza spends an amount equal to 5.8% of its sale on
advertising. If sales for a month were $28, 500. Find the amount spent in advertising.
Solution: The rate (R) is 5.8% of sales is advertising. The base (B) is $28, 500
5.8% of $28, 500 = R x B = $28, 500 x 0:058
= $1653
Example 6: If 5% sales tax collected by Famous Footwear was $780. What was the
amount of total sales?
Solution: Rate (R) of sales collected by famous footwear = 5%. This rate was
equivalent to $780 which is part (P)
The total sales (Base) - ?
Therefore, Portion/Part (P) = R x B
$780 = 5% x B
$780
Making B the subject, we get B = 5%
$780
=
0.05

The total amount of sales was $15, 600

Qns:
1. The number of individuals engaged in business on Torokauje Street in Arusha City
Council is 832. It is equivalent to 65% of the total population. How many people are
businessmen?
1
2. Suppose that the yearly utility cost of an apartment is 3 2 % of its value. If the utility

cost is $73, 500 per year, find the value of the apartment.

Example 7: Suppose that there are 1.65 million motorcycles in Tanzania. If 317500 of
the motorcycles are owned by women, find the percent of motorcycle owned by
women?

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Solution: The total motorcycles in Tanzania (This is a base (B)) = 1.65 million
motorcycles
Motorcycles owned by women (This stands as a part of the total (P)) = 317500
motorcycles.
The percent of motorcycle owned by women (This stands for Rate (R)) = ?
Recall Part (P) = Base (B) x Rate (R)
317500 = 1.65 million x Rate (R)
317,500
By making Rate (R) the subject, we get, 1,650,000 x 100% = 19.24%

Therefore, the percent of motorcycle owned by women = 19.24%

Increase and Decrease Problems: Business commonly look at how amounts change,
either up or down. For example a manager may want to know the percent by which
sales have increased or costs have been decreased, while a consumer might need to
know the price of an item has changed.
In increasing problems, the base (100%) plus portion of a base gives a new value.
Therefore
Original + increase = New Value
In decrease problems, the part equals the base (100%), minus some portion of the
base. Therefore: Original - decrease = New Value
Example 8: The value of a home sold by Thomas Dugally this year is $203,500, which
is 10% more than last year's value. Find the value of the home last year.
Solution: The increase in percent (10%) from 100% for this year is 110%. This increase
is equivalent to $203,500. We are required to find the value of the home last year, ie
before increment.
Therefore, $203,500 = 110%
? = 100?
$203,500 x 100
By crossing multiplication, we get. The value of the home last year = 110

= $185,000

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C. MATHEMATICS OF BUYING AND SELLING.
i. Buying:
The supply chain defines the channels or stages that a product passes through as it is
converted from a raw material to a finished product purchased by the consumer. The
stages include, Manufacturer Distributor Wholesaler Retailer
Consumer
Manufacturers: Buy raw materials and component parts and assemble them into
products that can be sold to other manufacturers or wholesalers.
Wholesaler: Also called middleman, buys from the manufacturers or other wholesaler
and sells to the retailer
Retailers: Sell directly to the ultimate user or consumer. Within the supply chain, all of
the channels must make a profit on the product to remain in business.

Invoices and Discounts

An Invoice: Is a commercial document that serves as a formal request for payment for
goods sold or services provided. It is typically issued by a seller or service provider to a
buyer or client and outlines the details of the transaction, including the quantity and
description of the items sold, their prices, payment terms, and other relevant
information. Invoices are an essential part of business transactions and financial record-
keeping, as they provide a record of the agreement between the parties and the amount
owed by the buyer.
Discount: Is a reduction of a list price of a product or service. It is typically offered to
customers as an incentive to encourage purchases, promote customer loyalty, or
achieve specific business objectives. Two types of discounts are trade discount and
cash discount
(a) Trade Discounts: Are often given to individuals who buy an item for resale or
produce an item that will be sold. The seller usually gives the price of an item as a
list price (Is a suggested price at which an item is to be sold to the public.)

Note: When computing a trade discount, keep in mind that the rate of discount is based
on the list price. That is:

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 AMOUNT OF DISCOUNT = RATE OF DISCOUNT X LIST PRICE

The net price/cost is the remainder when the amount of discount is subtracted from the
list price. The net price/cost is the price to the supplier, and becomes the cost to the
purchaser. The net cost is found by the formula:

NET PRICE = LIST PRICE − AMOUNT OF DISCOUNT

To compute the amount of the discount and the net price when the list price and
discount rate are known, first determine the amount of the trade discount, and then
calculate the net price.

Example 9: An item listed at $16000 is subject to a trade discount of 30%. Compute

(i) The amount of discount
(ii) The net price

Solution: (i) Amount of trade discount = Rate of discount X List price

= (0.3) X (16000) = $4800

(ii) Net price = List price -Trade discount

= $16000 – $4800 = $11200

Series Discounts:
A manufacturer may offer two or more discounts to different members of the supply
chain. If a list price is subjected to two or more discounts, these discounts are called a
discount series. In the previous example a single discount of 25% was offered.
Sometimes two or more discounts are combined into series or chain discounts. A series
is written for example 20/10, which means that 20% is subtracted from the list price and
from the difference another 10% discount is subtracted.
Another discount of 15% could be attached to series 20/10 to give a series discount of
20/10/15.

Calculations of series of discounts

In calculation of series of discount, we can either (i) calculate a series of discount
separately or (ii) use the compliment method. In our discussion we shall focus on the
first method
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Calculate a series of discount separately: When computing the net price, the
discounts making up the discount series are applied to the list price successively. The
net price resulting from the first discount becomes the list price for the second discount.
The net price resulting from the second discount becomes the list price for the third
discount; and so on.

Example 10: Kitchen crafter is offered a series discount of 20/10 on a cooking with
calphalon stainless steel cookware set with a list price of $600. Find the net cost after
the series discount.
Solution: List price = $600
Less first discount 20% of 600.00 = 120
$600.00 – 120.00 = 480
Net price after first discount $480
Less second discount 10% of $480.00 = $48.00
$480.00 – $48.00 = $432
Therefore the net cost is $432

Qn. An item listed at $150.0 is subject to the discount series 20/10/5. Determine the net
price.

(b) Cash Discount or Prompt payment discount

Cash discounts are issued by sellers to encourage prompt payment by customers. In
effect the seller is saying "Pay me quickly and receive a discount". Among each
other, manufacturers, distributors, wholesalers, and retailers usually sell goods on credit
rather than for cash. An invoice for the goods is sent, and the seller specifies payment
terms on the invoice. These payment terms indicate when the invoice amount is due for
payment and how much is to be paid. This discount reduces the amount to be paid, and
is based on the original amount of the invoice, the discount rate, and the timing of the
payment or payments. All payment terms have three things in common, rate of
discount, discount period and credit period.

Rate of discount is stated as a percent of the net amount of the invoice.

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Discount period is stated, indicating the time period when the cash discount can be
applied.

Credit period is stated, indicating the time period when the invoice must be paid. To
find a net cost when a cash discount is offered, begin with the list price subtract the
trade discount, then from the result subtract the cash discount. Use the following
formula:

Net cost = (List Price -Trade Discount) - Cash Discount

The type of cash discounts appears on invoice under terms which can be found on the
right-hand corner of the invoice. Many companies using automated billing systems state
the exact amount of the cash discount on the invoice. This eliminates all calculations on
the part of the buyer.

We can use either Ordinary Dating Method Or End of Month dating (EOM) method
to solve cash discount problems
Solving Cash Discount Problems using Ordinary Dating Method
The ordinary dating method of cash discount, for example, is expressed on an invoice
as: 2/10, n/30, or 2/10, net 30. And read "two ten, net thirty". The first digit is the rate of
discount (2%), the second digit is the number of days allowed to take discount (10 days)
and n/30(net 30) is the total number of days given to pay the invoice in full if the buyer
does not use the cash discount. If this invoice is paid within 10 days from the date of
invoice, a 2% discount is subtracted from the amount owed. If the payment is made
between the 11th and the 30th days from invoice, the entire amount of the invoice is due.
After 30 days from the date of Invoice, the invoice is considered overdue, and maybe
subject to late charge.
Example 11: Hans's invoice dated January 2 and offers terms of 2/10, net 30. Find
(a) The last date on which the 2% discount may be taken (b) The net payment date.
Solution: (a) Beginning with the invoice date, January 2, the last document for taking
the discount is: 2 + 10 = 12
(b)The net payment date is day in February (January 2 + 30 days). So the last net
payment date is 1st February.

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 Example 12: An invoice received by kitchen crafters for $840 is dated July 1 and offers
2/10, n/30. If the invoice is paid on July 8 and the shipping and insurance charges,
which was free on board (FOB) shipping point, are $18.70. Find the total amount due.
Solution:
(i) The invoice was paid seven (7) days after its date (8-1 = 7); therefore, the 2%
cash discount is taken.
(ii) The 2% discount to be taken is $840 x 0.02 = $16.80:
(iii) The cash discount is subtracted from the invoice amount to determine amount
due. Therefore $840 - $16.80 = $823.20 Amount due.
(iv) The shipping and insurance charges are added to find the total amount due:
$823.20 + $18.70 = $841.90 Total amount due.

Example 13: Determine the payment needed to settle an invoice with a net amount of
950, dated September 22, terms 2/10, n/30, if the invoice is paid
(i) on October 10 (ii) on October 1
Solution: The terms of the invoice indicate a credit period of 30 days and state that a
2% discount may be deducted from the invoice net amount of $950 if the invoice is paid
within 10 days of the invoice date of September 22. Ten days after September 22 is
October 2. The discount period ends October 2.
i. Payment on October 10 is beyond the last day for taking the discount. The discount
cannot be taken. The full amount of the invoice of $950 must be paid.
ii. October 1 is within the discount period; the 2% discount can be taken.
Amount paid=Net amount-2% of the net amount
= $950.00 - $0.02(950.00)
= $950.00 - $19.00
= $931.00

Question: (To be done by students)

An invoice for $752.84 dated March 25, terms 5/10, 2/30, n/60, is paid in full on April 20.
What is the total amount paid to settle the account?

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Solving cash discount problems with end of month dating.
End-of-month dating and proximo dating, abbreviated EOM and PROX, are treated
the same. For example both 3/10 EOM and 3/10 PROX, means that 3% may be taken
as cash discount if payment is made by 10th of the month that follows the sale. For
example an invoice dated July 14 with terms of 3/10EOM would have a discount date
10 from the end of the month, or the 10th of august (Aug. 10).

Since this method of increasing the length of time during which a discount may be
taken, has become common business practice to add an extra month when the date of
an invoice is 26th of the month or later. For example; if an invoice is dated march 25 and
the discount offered is 3/10EOM, the last date on which the discount may be taken is
April 10.

Example 14: If the invoice from Oster is dated June 10 with terms 3/20EOM, find
(a)The final date on which the cash discount may be taken.
(b)The net payment date.
Solution: (a) The discount date is July 20 (20 days after the end of June)
(b) When no payment due date is given, common business practice is to allow 20 days
after the last date. The net payment date is August 9, which is 20 days after the last
discount date July 20, since no net payment is given.

Example 15: An invoice for $1233.95 dated July 16, terms 2/10 E.O.M., is paid on
August 10. What is the amount paid?
Solution: The abbreviation E.O.M. means that the invoice is to be treated as if the
invoice date were July 31. Therefore, the last day for taking the discount is August 10.
2
The discount is 100
× $1233.95 = $ 24.679. Therefore, the amount paid is $1233.95 -

$ 24.679 = $1209.271

ii. Selling:
Success of a business depends on many things. One of the most important is the price
charges for goods and services. The difference between the selling price and cost
price (Cost) is called markup (or gross profit). i.e Markup = Selling Price - Cost

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 Cost- Is the amount paid to the manufacturer or supplier after trade and cash discounts
have been taken. Shipping and insurance charges are included in cost.
Selling Price-Is the price at which merchandise (goods/products) is offered to sell to
public
Operating expenses/overhead - This include the expenses of operating the business,
such as wages and salaries of employees, rent for building and equipment, utilities,
insurance and advertising.

Net Profit (Net earnings) - Is the amount remaining for the business after operating
expenses and the cost of goods have been paid. (Income tax is computed on net profit)
Generally: The markup represents the amount the retailers must add to the cost of the
goods to cover the operating expenses and make profit.
Markup can be based on Cost and it can also be based on selling price but the same
Markup. Formula is used.
Markups based on Cost: Markup based on cost is expressed as a percent of cost,
therefore business that use percent markup on cost recognize that cost is 100%. This
100% is the base of the portion of the formula.
Example 16: Nancy Ford bought a snow thrower that cost $210 for the true value
hardware store. She plans to sell the snow thrower for $300. What is Nancy's markup in
dollar? What is her percent markup on cost? (Round to nearest hundredth percent).
Solution:
(i) Markup in dollars is given by: M = Selling price (S) – Cost (C)
Therefore, M($) = $300 - $210 = $90
Nancy's markup in dollars is $90
Doller markup
(ii) Percent markup on cost = Cost
x 100%
$90
= x 100% = 42.86%
$210

Example 17: Mr. James bought a lamp that cost $100. To make his desired profit, he
needed 65% markup on cost. What is James’ dollar markup? What is his selling price?
Solution:
i. S = C + M.
Therefore; S = $100 + 65% of $100

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 65
= $100 + 100 x $100

= $100 + 0.65 x $100

= $100 + $65
= $165
Hence selling price is $165.

iii. Dollar markup = $165 - $100 = $65

Markups based on Selling Price:

Many retailers markup their goods on the selling price since sales information is easier
to get than cost information. These retailers use their prices in their inventory and report
their expenses as percent sales. Business that markup their goods based on selling
price recognize that selling price is 100%. In this case markup is expressed as a
percent on selling price.

Example 18: Nancy Ford bought a snow thrower that cost $210 for the true value
hardware store. She plans to sell the snow thrower for $300. What is Nancy's dollar
markup? What is her percent markup on selling price?
Solution:
(i) Markup in dollars is given by: M = S - C
Therefore, M($) = $300 - $210 = $90
Nancy's dollar markup is $90

(ii) Percent markup on selling price

Doller markup
Percent markup on selling price = Selling price
x 100%
$90
= x 100% = 30%
$300

Therefore, Percent markup on selling price = 30%

Example 19: Mr. James bought a lamp that cost $100. To make his desired profit, he
needed 65% markup on selling price. What is James’ selling price?
Solution:
(i) Calculating selling price: S = C + M
Therefore; S = $100 + 65% of S

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 65
S = $100 + 100 x S

S = $100 + $0.65S By making S the subject, we get;

S - $0.65S = $100
$100
S = 0.35
= $285.71

Hence selling price is $285.71

(ii) Dollar markup M = S - C = $285.71 - $100 = $185.71

Markdown: When merchandise does not sell at its marked price, the price is always
reduced. The difference between the original selling price and the reduced selling price
is called markdown. Markdown are reduction from the original selling price which may
be caused by seasonal changes, special promotions style changes and so on.
Markdown = Original Price - Reduced Price

Markdown percent is calculated as follows:

𝐌𝐌𝐌𝐌𝐌𝐌𝐌𝐌𝐌𝐌𝐌𝐌𝐌𝐌𝐌𝐌 𝐀𝐀𝐀𝐀𝐀𝐀𝐀𝐀𝐀𝐀𝐀𝐀
Markdown percent = x 100%
𝐒𝐒𝐒𝐒𝐒𝐒𝐒𝐒𝐒𝐒𝐒𝐒𝐒𝐒 𝐏𝐏𝐏𝐏𝐏𝐏𝐏𝐏𝐏𝐏

Example 20: Kassim marked down $18 TV to $10.8. Calculate the markdown and the
markdown percent.
Solution:
(i) Markdown is given by: S0 - Sp = $18 - $10.8 = $7.20
Markdown Amount
(ii) Percentage markdown is given by: Selling Price
x 100%
$7.20
% Markdown = $18.0
x 100%

= 40%

D: RATIO, PROPORTION AND VARIATION

Ratio: Is a fixed relationship between two or more quantities, amounts, or sizes of a
similar nature. For a ratio to exist, all terms involved in the ratio must be nonzero. Ratio
indicates the relationship how one quantity is of the other. For example if 𝑥𝑥 and 𝑦𝑦 are
two quantities and both are in same unit we need to compare these two quantities we
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can write it as 𝑥𝑥/𝑦𝑦 is known as 𝑥𝑥 ratio 𝑦𝑦 abbreviated as x:y. The ratio must meet the
following criteria: There must be two or more quantities, all terms must be of a
similar nature, all terms must be nonzero.
Uses of ratio in real life situation
 In financial analysis ratio analysis is the one of the most powerful tool to interpret the
data.
 The ratio analysis used in supplier of goods on credit, banks, financial institutions,
investors, shareholders and management as a tool to evaluate the financial position
and to check the performance of the firm. How the firm granting credit, providing
loans or making investment in the firm we can check it by calculating the ratio.
Example 21: Cash price distributed between two students in the ratio of 4:5 is Tsh
900,000. Calculate the amount that each student received.
Solution: The amount to be distributed is Tsh 900,000
According to the condition of the given question
Let ratio between two students’ 𝑋𝑋 and 𝑌𝑌 is 4:5
Sum of the given ratio =4+5=9
4 5
Fractional part of student 𝑋𝑋= 9 and the fractional part of student 𝑌𝑌= 9
4
The student will receive X: 9
x Tsh900, 000 = Tsh400,000

5
The student will receive Y: 9
x Tsh900,000 = Tsh500,000

Example 22: Manager of particular firm is earning 𝑅𝑅s 200,000 per month as salary and
his per month spending are Rs. 190,000. One of the assistants of the same manager
earning Rs. 40,000 per month and his per month saving is Rs. 8000. As regard to their
income who is saving more?
Solution: Manager’s monthly income =𝑅𝑅s 200,000
His monthly spending’s=𝑅𝑅s 190,000
His monthly saving =𝑅𝑅s 200,000−𝑅𝑅s190,000=𝑅𝑅𝑅𝑅10,000
1
Ratio between saving and income =10,000∶ 200,000= 1: 20 = 20 x 100% = 5%

Assistant’s monthly income =𝑅𝑅s.40,000

His monthly saving =𝑅𝑅s 8000
1
Ratio between saving and income =8000∶ 40,000=1:5= 5 ×100%=20%

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Hence we can see that saving-income ratio of manager and subordinate are 5% and
20% respectively. Which shows that manager’s subordinate is saving more regarding
his income.
Example 23: Convert the given ratio 30:360 into its simplest form.
30 1
Solution: 30:360 = 360 = 12

1 : 12
Proportions
A proportion is an equation that states that two ratios are equal. Since the ratio 4 : 20
is equal to the ratio 1 : 5 , we may write the proportion 4 : 20 = 1 : 5. The general form of
a proportion may be written as a : b = c : d Each of these proportions is read as “a is to
b as c is to d."
4 5
Example 25: Show that 16 = 20 is a proportion
4 1 5
Solution: By simplifying each of the fraction we get the same value. Ie : 16
= 4
and 20
1 1 4 5
= 4 . Since each ratio equals 4, the ratios are equal and 16
= 20 is a proportion

Questions (To be done by students individually)

1. Solve the proportion 25 : q = 5 : 2 for q.
3𝑥𝑥 7
2. Solve the proportion 4
= 12

Variations: deal with explaining, in mathematical language, how one quantity changes
with respect to one or more other quantities. There are four types of variation:
(i) Direct variation (ii) Inverse variation (iii) Joint variation (iv) Combined variation.

Direct Variation indicates a relationship between two quantities such that an increase
in one causes a corresponding increase in the other and a decrease in one causes a
corresponding decrease in the other.
Inverse Variation: Indicates a relationship between two quantities such that an
increase in one causes a corresponding decrease in the other and a decrease in one
causes a corresponding increase in the other. If y varies as a reciprocal of x we say that
1
y varies inversely as x. That is, y ∝ 𝑥𝑥

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Example 26: If 30 labors are required to construct a building in 90 days. How many
labors are required to construct the building in 45 days?
Solution:

We can observe that from the above table that smaller the days more labors are
required to finish the work which shows the inverse proportion. 30∶ 𝑥𝑥 = 90∶45
𝑥𝑥 90
30
= 45
30 𝑥𝑥 90
X=
45

= 60
Joint Variation: If y varies jointly as u and v, we write y varies as the product of u and
v, that is y ∝ uv or y = kuv. This means that if y varies as u when v is constant and y
varies as v when u is constant, then y varies jointly as u and v when both u and v vary.
Students should discuss this question: The variable y varies jointly with x and z. The
value of y = 12 when x = 4 and z = 8. What is y when x = 6 and z = 10?

Combined variation: It involves both direct and inverse variation. For example, if we
say "y varies directly with x and inversely with z," we are faced with combined variation.
x
This can be written as follows: y ∝ z
x
That means: y = k z

Example 28: (To be discussed by students): y varies directly as x1 and inversely as

x2. It is known that when y=20, x1 = 30; x2 = 12: Find y when x1 = 12; x2 = 4

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E: CURRENCY CONVERSIONS

What is meaning of currency conversion?

It is a process in which a currency of one country is exchanged into the currencies of
other countries. Currency conversion/foreign exchange is essentially the price
measure of one currency against another. As the rate changes, one country's money
can become weaker or stronger against other currencies. For example, if the euro/U.S.
dollar conversion rate is 1.25, that means one euro can equate to $1.25 in American
currency.

How does foreign exchange work?

Foreign currency exchange converts one currency into another, but it's not usually in
a 1:1 ratio. Exchange rates change regularly based on the fluctuating global trade
markets. i.e The rate of exchange of different currencies is determined by forces of
demand and supply of currencies. Rate of exchange always varies with variation in the
supply and demand for various currencies.
When an international money transfer is made between accounts, the rate calculates
the difference based on the markets at that exact time. The foreign exchange that
involves conversion of one currency into another currency is necessary because it
enables individuals to conduct foreign or international trades. The international trades
are trades which are conducted between two or more countries. The following table
represents an example of rate of exchange between Tanzanian shillings and foreign
currencies:
BUY SELL
1U.S dollar 2160.00 2180.00
1Sterling Pound 3300 3400
1Euro 2300.00 2400.00
Ksh 20.50 21.00
1 U.A.E Dirham 530.00 550.00

Example 29: A Tanzanian businessman imported goods worth U.S.A dollars 5,865.
How many shillings did he pay? If the rate of exchange is 1U.S dollar = TSh.2180.

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Solution: 1U.S dollar = TSh.2180. Therefore, $5, 865 = T.Shs2180 x 5,865 = TSh12,
785. 700
Example 30: A Tanzanian exported goods worth Sh. 17,794,000 to U.K. Calculate the
value of these exports in Sterling Pound. Use 1Sterling Pound = T.Sh3300
Solution:
1Sterling Pound = T.Sh3300
? = T.Sh17,794. 000
1 x Tsh 17,794.00
Therefore, T.Sh17,794. 000 = Tsh 3300

= 5392.12 Sterling Pound:

Example 31: An American tourist came to Tanzania with U.S $3870. He changed all his
dollars to Tanzanian shillings paying a bank charge of 1%. How many Shillings did he
get? (1U.S = TSh 2160)
Solution:
1U.S = TSh 2160
U.S $3870 = ?
U.S $3870 x TSh 2160
So, U.S $3870 in Tsh = 1U.S

= TSh8,359,200
We should calculate the exact amount of charge (1%) that were paid to the bank i.e

1%
1% of TSh8,359,200 = 100% x TSh8,359,200

= 0.01 x TSh8,359,200 = Tsh 83592

The amount the American tourist got after charges is:

TSh8,359,200 - Tsh 83592 = Tsh 8275608

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