Study Scheme 2018

(Updated in 2023)

05 - BUSINESS MATHEMATICS & STATISTICAL INFERENCE OPERATIONAL LEVEL-2

INTRODUCTION  Calculate for both ungrouped and grouped data:

This course comprises basic concepts and techniques of arithmetic mean, median, mode, range, variance,
mathematics & statistics. A thorough knowledge in the standard deviation and coefficient of variation;
areas of basic mathematics and presentation of data is an  Calculate dispersions, correlation, correlation
essential skill for management accountant. The coefficient and coefficient of determination;
management accountant should understand statistical  Compute variance, standard deviation and coefficient
concepts, because of the need to estimate the uncertainties of variation;
of business decisions. This course also gives basic  Calculate indices using either base or current weights
understanding of mathematical techniques applied for and apply it to deflate a series;
forecasting in corporate planning and Financial  Calculate simple probability demonstrates
Management. conditional probability and rules of probability;
 Compute an expected value and demonstrate the use of
OBJECTIVES expected value tables in decision making;
To provide the students basic knowledge of mathematics  Elucidate the concepts of risk and uncertainty;
and statistics to enable them to:  Demonstrate the use of normal distribution tables;
 Use and interpret mathematical and statistical  Apply the Pareto distribution and the 80:20 rule;
methods, and  Apply the regression equation to predict the
 Present the results of quantitative nature, in a suitable dependent variable, given a value of the independent
form for taking business decisions. variable;
 Prepare a time series graph and identify trends and
LEARNING OUTCOMES patterns using an appropriate moving average;
On completion of this course, you should be able to:  Identify the components of a time series model and
 Understand integers, fractions and decimals, prepare a trend equation using either graphical means
percentage and ratios; or regression analysis;
 Manipulate inequalities and solve linear, non-linear  Calculate seasonal factors for both additive and
and simultaneous equations; multiplicative models and comprehend its
 Understand the concept of derivatives and calculate appropriateness;
maxima, minima and point of inflection;  Calculate predicted values given a time series model;
 Work out simple and compound interest and  Perform confidence Interval and hypothesis Z and T
understand concept of loan, mortgage and discounting; test for single population mean;
 Calculate NPV, IRR, annuities and perpetuities;  Apply sampling Frequency Distribution with and
 Realize the difference between data and information, without replacement for sample size 2 and 3;
tabulate data and prepare graphs, charts and diagrams;  Find the seasonal variations and demonstrate
forecasting techniques.
INDICATIVE GRID
PART SYLLABUS CONTENT AREA WEIGHTAGE
1 Basic Mathematical Techniques
2 Formulae and Equations
A 3 Derivatives 40%
4 Compounding and Discounting
5 Basic Investment Appraisal
6 Data and Information
7 Collection and Presentation of data
8 Averages
9 Dispersion
10 Correlation and Linear Regression
B 11 Index numbers 60%
12 Probability
13 Normal distribution
14 Estimation & Testing
15 Sampling & Sampling Frequency Distribution
16 Forecasting - Time series
TOTAL 100%
Note: The weightage shown against each section indicates, study time required for the topics in that section. This weightage
does not necessarily specify the number of marks to be allocated to that section in the examination.
DETAILED CONTENTS
PART – A  Roots and Powers
BUSINESS MATHEMATICS  Errors
1. Basic Mathematical Techniques 2. Formulae and Equations
 Integers, Fractions and Decimals  Introduction
 Order of Operations  Manipulating Inequalities
 Percentage and Ratios

1
 Study Scheme 2018
(Updated in 2023)

 Linear Equations, Linear Equations and Graphs, 10. Correlation and Linear Regression
Simultaneous Equations  Correlation
 Non-Linear Equations, Progressions  Correlation Coefficient and Coefficient of
 Arithmetic Progression determination
 Geometric Progression (nth Terms and Sum)  Spearman’s Rank Correlation Coefficient
 Matrices (Definition Sum and multiplication of two  Lines of Best Fit
matrices)  Scatter Graph Method
 Use in Solving simultaneous, equators, Cramer’s  Linear Regression Analysis
rules  Using Spreadsheets (Characteristics of a useful
 Linear programming, Properties and using of spread sheets, Advantage and disadvantage of
programming for maximization of profit and spread sheets, inserting formula in excel, explain
minimization of cost. formula with conditions)
3. Derivatives 11. Index numbers
 Concept of Derivative and differentiation  Basic Terminology
 Basic Rules of differentiation  Index Relatives
 Instantaneous rate of change  Time Series of Index Relatives
 Derivatives, Maxima and Minima & Point of  Time Series Deflation
Inflection  Composite Index Numbers
 Weighted Index Numbers
4. Compounding and Discounting
 Retail Price Index for Pakistan
 Simple Interest, Compound Interest, Equivalent
Rates of Interest
12. Probability
 Regular Savings and Sinking Funds
 Concept of Probability and counting techniques
 Loan and Mortgages
(including multiplication rules of counting,
 Concept of Discounting
combinations, permutations, etc))
 Rules of Probability
5. Basic Investment Appraisal
 Expected Values
 Net Present Value (NPV) Method
 Expectation and Decision Making
 Internal Rate of Return (IRR) Method
 Annuities and Perpetuities
13. Normal distribution
 Linking Compounding and Discounting
 Probability Distributions (Discrete and continuous)
 Using Spreadsheet (Define Spread sheet, need to use
 Normal Distribution
of spread sheet, Define work book, work sheets and
 Standard Normal Distribution
type of cell contents)
 Binominal of passion distribution
 Shareholder Value (define shareholder value and
 Hyper geometric distribution
identify financial objectives to maximize
 Using Normal Distribution to Calculate Probabilities
shareholders wealth)
 Pareto Distribution and 80:20 Rule
PART – B
14. Estimation & Testing
STATISTICS AND STATISTICAL INFERENCE
 Confidence Interval Z and T test for single
population mean
6. Data and Information
 Testing hypothesis Z and T test for single population
 Introduction, Characteristics of Good Information,
mean
Data Type (Qualitative and Quantitative data,
 Chai square distribution
primary and secondary data, discrete and
continuous data)
15. Sampling & Sampling Frequency Distribution
 Sampling Frequency Distribution with & without
7. Collection and Presentation of data
replacement for sample size 2 and 3
 Tables, Charts, Frequency Distribution, Histograms,
 Random and Non-Random Sampling
Ogives, Scatter Diagram
 Sampling Frequency distribution for proportion
8. Averages
16. Forecasting - Time series
 Arithmetic Mean, Harmonic mean, Geometric mean,
 Components of Time Series (Define time series and
Mode, Median
identify its examples, preparing time series graphs
and identifying trends)
9. Dispersion
 Finding the Trend (Methods, prepare trend equation
 Range
using graphical means or regression analysis)
 Quartiles and Quartile Range and Quartile deviation
 Finding the Seasonal Variations (Define Season
or the Semi-Quartiles Range
variations, finding the seasonal components using
 Mean Deviation
additive and multiplicative models)
 Variance and Standard Deviation
 Forecasting (Define forecasting, forecasting using
 Coefficient of Variation
linear regression analysis)
 Skewness
 Limitation of Forecasting Models