.3125 is read as 3125 ten thousandths. So, set 3125 over 10000, and simplify using common factors.
The first common factor is easy... 5. So divide 3125 and 10000 by 5.
Your new fraction should be 625/2000. As you can see, we still have a common factor of 5, so divide 625 and 2000 by 5 again. Your new fraction should be 125/400. Divide both the numerator and denominator by 5 again. This should give you the new fraction of 25/80. As funny as this seems, they still have a common factor of 5, so do it again. It should now give you 5/16. With no more common factors, 5/16 is your answer.
Check it with a calculator by dividing 5 by 16. Your answer should be .3125
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