**Last Updated on Nov 11, 2020**

##### Basic Definitions & Formulae

**Cost price (C.P.):** This is the price at which an article is purchased.

**Selling price (S.P.):** This is the price at which an article is sold.

**Profit or Gain:** If the selling price is more than the cost price, the difference between them is the profit incurred.

**Formula:***Profit or Gain = S.P. – C.P.*

**Loss:** If the selling price is less than the cost price, the difference between them is the loss incurred.

**Formula:** **Loss = Cost price (C.P.) – Selling Price (S.P.)**

Profit or Loss is always calculated on the cost price.

* Marked price:* This is the price marked as the selling price on an article, also known as the listed price.

* Discount or Rebate:* This is the reduction in price offered on the market or listed price.

Below is the list of some basic formulas used in solving questions on profit and loss:

**Gain % = (Gain / CP) * 100**

**Loss % = (Loss / CP) * 100**

**SP = [(100 + Gain%) / 100] * CP**

**SP = [(100 – Loss %) / 100]*CP**

**Example:**

**Given S.P. = ₹ 50/ each and profit% as 40%.**

Let C.P. be x. Now,

Profit % = (50 – x / x) * 100

40 = (50 – x / x) * 100

4x= 500 – 10x

14x = 500

x = 35.71

Profit = 50 – 35.71

= 14.83

**What if the profit of 40% is on selling price instead?**

Then, Profit = profit% * S.P

= 0.4* 50

= ₹20

C.P. = S.P. – Profit

= ₹50 – ₹20

= ₹30

**Let’s now move on to calculate S.P. and C.P. **

Let C.P. be y

Since, profit % = (profit/ Cost price) *100

20 = (10/y) *100

2y = 100

y = ₹ 50

Therefore, S.P. = ₹50 + ₹10

= ₹60

This video lays out the basics of Profit and Loss. Understanding this topic well is necessary to solve questions that are asked in various competitive exams in the Quant section - applicable to CAT, XAT, MAT, SNAP, IIFT, CLAT, AILET, DU LLB, any other entrance exam as well. For more such content, visit our website - **examvictor.com**

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