1. Let's solve an example problem involving fractions: Simplify the fraction $\frac{12}{16}$.\n\n2. The formula to simplify a fraction is to divide both the numerator and denominator by their greatest common divisor (GCD).\n\n3. First, find the GCD of 12 and 16. The factors of 12 are 1, 2, 3, 4, 6, 12. The factors of 16 are 1, 2, 4, 8, 16. The greatest common factor is 4.\n\n4. Now divide both numerator and denominator by 4: $$\frac{12 \div 4}{16 \div 4} = \frac{3}{4}.$$\n\n5. So, the simplified form of $\frac{12}{16}$ is $\frac{3}{4}$. This means the fraction is reduced to its simplest terms where numerator and denominator have no common factors other than 1.