BUSINESS MATHEMATICS

MODULE 2
CHAPTER 7
RATIO, PROPORTION, AND PERCENT
7.1. RATIO
A ratio is the relation between two like numbers or quantities expresses as a quotient. It is a
method of comparing one quantity with another quantity. Note that a ratio is considered as a
common fraction. Like common fractions, ratios are usually reduced to lowest terms. The fraction
9 3
may be reduced to the lowest term of . In ratio form, the notation is 9:15 (read as 9 is to 15),
12 5
which equals to 3:5.
Ratios should be expressed in like terms before being reduced. It should be noted that the
ratio of 1 ton to 5,000 kilos is not the ratio 1 is to 5,000. The terms should be converted to the same
unit of measurement. In changing ton to kilos, the solution is as follows:
1 ton is to 5,000 kilos
1 ton = 1,000 kilos
1,000 𝑖𝑙𝑜𝑠
1 ton x = 1,000 kilos
1 𝑡𝑜𝑛

1,000 kilos : 5,000 kilos or 1:5 (1 is to 5)

Ratios are very useful in business computations like analysis of financial statements,
allocation of cost and expenses, distribution of income and losses, and the like.
Example 1:
Mr. Julian Ayala and Henry Tantoco formed a partnership. Ayala invested P4,500,000
whereas Tantoco contributed P7,500,000 to the business. Find the ratio of the following:
a.) Ayala’s investment to Tantoco’s
b.) Tantoco’s investment to Ayala’s
c.) Ayala’s investment to the total capital
d.) Tantoco’s investment to the total capital
Solution:
a.) P4,500,000 : P7,500,000 = 3:5
b.) P7,500,000 : P4,500,000 = 5:3
c.) P4,500,000 : (P4,500,000 + P7,500,000) = P4,500,000 : P12,000,000 = 3:8
d.) P7,500,000 : P12,000,000 = 5:8
Allocation of a number according to ratio
To allocate or divide a number into parts according to ratio, consider the following steps:
1. Add the terms of the ratio.
2. Write the terms as the numerator with their sum as the denominator.
3. Multiply the fraction to the whole to get the part.
Example 2:
Suppose that P2,700,000 is to be allocated for sales department, marketing department, and
advertising department in the ratio of 2:3:4. How much money will be allocated for each
department?
Given:
Whole = P2,700,000
Ratio = 2:3:4
Solution:
1st : 2 + 3 +4 = 9
2 3 1 4
2nd : ; 𝑜𝑟 ;
9 9 3 9
2
3rd : x P2,700,000 = P600,000
9
1
x P2,700,000 = P900,000
3
4
x P2,700,000 = P1,200,000
9

Sales Department will have P600,000, Marketing Department will have P900,000, and
Advertising Department will have P1,200,000.
Example 3:
Joby Espinosa bought a house and lot that was advertised as follows:
Land ----------------------------------------------- P 1,500,000
House ---------------------------------------------- P 3,000,000
Appliances ---------------------------------------- P 1,200,000
Rags and Curtains ------------------------------- P 150,000
TOTAL --------------------------------------------- P 5,850,000
Joby was able to buy the property for P5,265,000. For record purposes, the buyer wanted to
allocate the P5,265,000 to the various components in the same ratio as the components were
advertised. Find the cost allocation to each component.
 The sum of the terms and the denominator is P5,265,000.
Allocation is then (P5,265,000 ÷ P5850,000 = 0.9)
Land 0.9 x P 1,500,000 = P 1,350,000
House 0.9 x P 3,000,000 = P 2,700,000
Appliances 0.9 x P 1,200,000 = P 1,080,000
Rags and Curtains 0.9 x P 150,000 = P 135,000
TOTAL P 5,265,000

When a ratio contains a set of two or more fractions, the fractions should be converted to
fractions with a common denominator and then use the ratio of their numerators.
Example 4:
1
Rica, Gemma, and Rose formed a business venture sharing gains and losses in the ratio of ,
2
3 1 1 3
, respectively. After Rose retired, Rica and Gemma agreed to continue using the ratio is to
10 5 2 10
respectively. The financial statement of the business shows a profit of P24,000,000. Determine the
profit share of:
a.) Rica
b.) Gemma
Solution:
1 3 5+3
+ =
2 10 10

Use the ratio of the numerators 5 and 3 of the common denominator 10.
a.) 5 + 3 = 8
5
x P24,000,000 = P15,000,000 share of Rica
8

5
b.) x P24,000,000 = P9,000,000 share of Gemma
10

7.2. PROPORTION
Proportion is the relation of two things in size, number, amount or degree. It is a statement
2 5
of equality between two ratios. The ratios and are two equal ratios and therefore, constitute a
4 10
proportion.
2 5
A proportion is written as = or 2:4 = 5:10
4 10

The double = is read equals. In a proportion there are four terms: the
inner terms are the means, while the outside terms are the extremes.
 If one of the terms in a proportion is missing, the rule of proportion can be applied, that is,
the product of the means equals the product of the extremes and vice versa.
Example 5:
8 : 12 = x : 9
Solution:
12(x) = 8(9)
12x = 72
x=6

7.3. PERCENT
Percent is the number of the hundredths of a certain number included in a particular other
number. Percents are fractions or decimals with the denominator of 100. In other words, the % sign
means hundredths. To use percent in arithmetic application, they must first be changed to a
decimal or fraction.
A. Changing Percent to a Decimal
To change percent to a decimal, simply drop the % symbol and move the decimal point two
places to the left 9divide by 100). If the percent is in fractional units, first we change fraction to
decimal before moving the decimal point.
Examples:
a. 20% = .20
b. .003% = .00003
1
c. % = .125% = .00125
8

B. Changing Decimal to a Percent

To change decimal to a percent, move the decimal point two places to the right and annex
the percent sign.
Examples:
a. .18 = 18%
b. 34.5 = 3,450%
c. .002 = .2%
 C. Reduce Decimal to a Common Fraction
To reduce a decimal to a common fraction, write the given decimal number disregarding the
decimal point as the numerator of a common fraction with a denominator of the power of 10 of the
given decimal.
Examples:
9
a. .9 = , for 1 decimal point the denominator is 10.
10
25
b. .25 = , for 2 decimal points the denominator is 100.
100
358
c. .358 = , for 3 decimal points the denominator is 1,000.
1,000

D. Reduce a Common Fraction to a Decimal

Divide the numerator by the denominator.
Examples:
3
a. = .6
5
1
b. = .25
4
18
c. = .3272727
55

E. Convert Percent (for a fractional percent0 to a Fraction

Drop the percent symbol, then multiply the number by 1/100 and reduce to lowest terms.
Examples:
1 76 19
a. 76% = 76 x = =
100 100 25
1 1 1 1
b. %= x =
8 8 100 800
1 156 56 14
c. 156% = 156 x = =1 = 1
100 100 100 25

F. Convert Fractions to Percent

Divide the numerator by the denominator to convert fraction to a decimal then move the
decimal point two places to the right, and add the percent symbol.
Examples:
1
a. = .05 = 5%
20
1
b. = .20 = 2%
5
3
c. = .75 = 75%
4
7.4. ALIQUOT PARTS OF 100%
A number that exactly divides (with zero remainder) another number is called the aliquot
part of the number. Thus, 3 is an aliquot part of 6 (because 3 is an exact divisor of 6); 5 is an aliquot
1
of 15 (15 + 5 is 3 remainder 0); 12 is an aliquot part of 100 (divides 100 exactly 8 times).
2

Percent Equivalent of Common Fractions

In business, we frequently use aliquot parts of 1 in percent, decimal, and fraction form. The
following is a short list of aliquot parts that you will find very helpful, when memorized.

FRACTION DECIMAL PERCENT FRACTION DECIMAL PERCENT

1 1 1
0.50 50% 0.125 12 %
2 8 2

1 33
1 3 1
37 %
0.333 3 0.375 2
3 8
2 2 5 1
0.667 66 % 0.625 62 %
3 3 8 2

1 7 1
0.25 25% 0.875 87 %
4 8 2

3 1
0.75 75% 0.10 10%
4 10
1 3
0.20 20% 0.30 30%
5 10
2 7
0.40 40% 0.70 70%
5 10
3 9
0.60 60% 0.90 90%
5 10
4 10
0.80 80% 1.00 100%
5 10
1 16
2 1 1
0.1667 3 0.0833 8 %
6 12 3

5 1 1 1
0.833 83 % 0.0625 6 %
6 3 16 4

1
0.05 5%
20