Applying Percentages in Various Contexts

Vocabulary terms and mathematical formulas related to percentage change, inflation, markups, discounts, VAT, and business profit/loss analysis based on the lecture notes.

Percentage Increase/Decrease

The measure of how much a value has changed relative to its original amount, expressed as a percentage, calculated as: $\frac{\text{New Value} - \text{Original Value}}{\text{Original Value}} \times 100\%$

Inflation

The general increase in the price of goods and services over time, which reduces the purchasing power of money.

Consumer Price Index (CPI)

A metric used to track the average change over time in the prices paid by households for a fixed "basket" of everyday goods and services, including food, clothing, and utilities.

Inflation Rate

The percentage change in the Consumer Price Index (CPI) over a specific period, calculated as: $\frac{CPI_{\text{current}} - CPI_{\text{previous}}}{CPI_{\text{previous}}} \times 100$

Cost (C)

The original price paid by a business to produce, buy, or manufacture an item.

Markup (M)

The additional amount added to the cost of a product to cover expenses and ensure a profit when the item is sold.

Selling Price (SP)

The final price charged to the customer, computed as: $\text{Selling Price} = \text{Cost} + \text{Markup}$

Markup Based on Cost

A method where the markup is calculated as a percentage of the original cost: $\text{Markup} = \text{Cost} \times \text{Markup Rate (based on cost)}$

Margin Rate

The ratio of markup to the selling price, expressed as a percentage: $\frac{\text{Markup}}{\text{Selling Price}} \times 100$

High Gross Margin

A situation, typical of luxury brands, where a large portion of the price is kept as profit, requiring lower sales volume to earn well.

Low Gross Margin

A situation, typical of grocery stores, where most earnings are spent on acquiring products, requiring a massive volume of sales to make money.

Markdown

The amount deducted from the original selling price of an item, also known as a discount.

Sale Price

The final price of an item after a markdown has been applied: $\text{Sale Price} = \text{Selling Price} - \text{Markdown}$

Percentage Discount

A price reduction where a specific percentage is deducted from the original selling price.

Quantity Discount

A discount or free items offered to customers when they purchase goods in large quantities.

Early Payment Discount

A price reduction offered to customers who settle their bills promptly, such as within a 10-day window.

Seasonal Discount

A price reduction offered during times of the year when sales are typically slow, such as low prices at a beach hotel during the rainy season.

Value-Added Tax (VAT)

A 12% tax imposed on the sale of goods and services in the Philippines, used by the government to fund public services like schools and hospitals.

VAT Amount Calculation

The formula used to determine the tax amount on an item: $\text{VAT} = 0.12 \times \text{Item Price}$

Revenue

The total amount of money a business receives from its activities, such as sales of goods and services, interest income, or service income.

Profit

A financial gain achieved when total revenue is greater than the total expenses, costs, and taxes.

Loss

A financial deficit occurring when total revenue is less than the total expenses, costs, and taxes needed to sustain the activity.

Net Profit Margin

A measure of efficiency that shows how many centavos of every peso of sales remains as actual profit: $\frac{\text{Profit/Loss}}{\text{Revenue}} \times 100$