Working with Decimals
Working with Decimals
Since working with fractions is often difficult, we use decimals more often in business than fractions. Decimals are much easier to use in computations than fractions, especially when using calculators or spreadsheet programs like Excel.
Converting Fractions into Decimals
To convert a fraction into a decimal, simply divide the numerator by the denominator.
Calculators and spreadsheet programs, like Excel, make converting fractions into decimals very easy.
Level of Accuracy
Sometimes, converting a fraction into a decimal results in a value with many, or in some cases, never-ending digits. For example, if you were to convert 1/3 into a decimal manually, you would find that the value is .333333….. This number actually never ends.
When faced with such a number, usually 3 or 4 decimal places will produce the accuracy level needed for most business computations. When needed, round the value to the third or fourth decimal place. For example: 2/3 = .667 or .6667. This number, like 1/3, produces a never-ending value when converting it to a decimal.
Multiplying Decimals
When you multiply numbers with decimal places, you must pay attention to the number of decimal places that your answer has. The simple solution to this is to use a calculator or a spreadsheet. However, since you won’t always have one available, here are the rules:
When multiplying two decimal numbers, count the number of decimal places used in both numbers. The answer should be displayed with the total number of decimal places in both numbers.
For example: .3 × .25. There are 3 decimal places, so the answer should have three decimal places. .3 × .25 = .075.
Multiplying by Powers of 10
When you multiply a decimal by 10, simply move the decimal point one place to the right. For example: 2.3 × 10 = 23.
When you multiply by 100, 1,000, or the like, just move the decimal point one place to the right for each zero.
2.3 × 100 = 230. Here you add a zero to move the decimal point two places to the right.
Dividing Decimals
When you divide a number by a decimal number less than one, the result will be larger than the original number. For example: 2 ÷ .5 = 4.
Dividing by Powers of 10
When you divide by a number that is a power of 10 (10, 100, 1000), move the decimal point one place to the left for every zero.
For example: .3 ÷ 10 = .03.