Numbers, money, and prices

A1 Level- Vocabulary Themes (Business-context)

Numbers, Money, and Prices

Numbers, Money, and Prices

A comprehensive guide to understanding financial numeracy

Understanding Numbers in Finance

Numbers are the foundation of all financial transactions. Whether you’re shopping, budgeting, or running a business, understanding how to read, interpret, and work with numbers is essential.

Reading Large Numbers

Large numbers can be intimidating, but breaking them down makes them manageable. In most English-speaking countries, we use commas to separate thousands, millions, and billions.

Example: 1,250,000 is read as “one million, two hundred fifty thousand”

In business contexts, you’ll often see abbreviations like K (thousand), M (million), and B (billion). For instance, $2.5M means two and a half million dollars.

Understanding Money and Currency

Money is represented using currency symbols and decimal points. The decimal point separates whole units from fractional units (cents in most currencies).

Currency Formats

Different countries format currency differently. In the United States, we write $1,234.56, while in Europe, you might see €1.234,56 or 1 234,56€.

Key Point: Always pay attention to decimal placement. The difference between $1.50 and $150 is significant!

Calculating Prices

When working with prices, you’ll need to perform basic operations like addition, subtraction, multiplication, and division. Understanding percentages is also crucial for discounts and taxes.

Example: If an item costs $80 and there’s a 25% discount, you multiply: $80 × 0.25 = $20 off, making the final price $60.

Percentages in Pricing

Percentages are used everywhere in finance: discounts, taxes, interest rates, and profit margins. A percentage represents a portion of 100.

Common Percentage Calculations

Finding a percentage of a number: Multiply the number by the percentage (as a decimal). For example, 15% of $200 is $200 × 0.15 = $30.

Adding a percentage: When adding sales tax, multiply by (1 + tax rate). If tax is 8%, multiply by 1.08.

Subtracting a percentage: For discounts, multiply by (1 – discount rate). A 30% discount means you pay 70% of the original price, so multiply by 0.70.

Unit Prices and Comparisons

Unit pricing helps you compare products of different sizes. Divide the total price by the quantity to find the price per unit.

Example: A 32 oz bottle costs $4.80. The unit price is $4.80 ÷ 32 = $0.15 per ounce.

Tips for Working with Money

Always round money calculations to two decimal places (cents). When dealing with multiple currencies, be aware of exchange rates. Keep track of your calculations and double-check important figures.

Test Your Knowledge

1. How would you read the number 3,450,000?
2. A jacket costs $120 and is on sale for 35% off. What is the sale price?
3. If a 24 oz bottle costs $3.60, what is the unit price per ounce?
4. An item costs $45 before tax. If sales tax is 8%, what is the total price?
5. What does $2.5M mean in business notation?

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