Basic Concepts of Profit and Loss

Basic Concepts of Profit and Loss

Basic Concepts of Profit and Loss

Last Updated on Nov 11, 2019

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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