Profit and Loss
Profit and Loss
Profit and loss is a fundamental concept in quantitative ability, often covered in various competitive exams and real-life business scenarios. It deals with the financial aspect of buying and selling goods or services, calculating the profit or loss incurred in a transaction.
Let's understand the key terms related to profit and loss:
Cost Price (CP): The price at which an article is purchased or the cost incurred to produce an item.
Selling Price (SP): The price at which an article is sold is known as Selling Price.
Profit (P): The amount earned when the Selling Price (SP) is higher than the Cost Price (CP).
Loss (L): The amount incurred when the Selling Price (SP) is lower than the Cost Price (CP).
Profit Percentage: The percentage of profit earned concerning the Cost Price.
Loss Percentage: The percentage of loss incurred concerning the Cost Price.
The general formulas for calculating profit and loss are as follows:
Profit (P) = Selling Price (SP) of a commodity- Cost Price (CP) of a commodity
Loss (L) = Cost Price (CP) of a commodity - Selling Price (SP) of a commodity
Profit Percentage = (Profit / Cost Price of a commodity) * 100
Loss Percentage = (Loss / Cost Price) * 100
Now, let's go through some examples to illustrate profit and loss calculations:
Example 1:
A shopkeeper bought a shirt for $40 and sold it for $60. Calculate the profit amount and profit percentage.
Solution 1:
Cost Price (CP) = $40
Selling Price (SP) = $60
Profit (P) = SP - CP = $60 - $40 = $20
Profit Percentage = (Profit / CP) * 100 = ($20 / $40) * 100 = 50%
Example 2:
A trader sold a book for $500, incurring a loss of $100. Calculate the cost price and loss percentage.
Solution 2:
Selling Price (SP) = $500
Loss (L) = $100
Cost Price (CP) = SP + L = $500 + $100 = $400
Loss Percentage = (Loss / CP) * 100 = ($100 / $400) * 100 = 25%
Examples:
Example 1:
A shopkeeper bought a smartphone for $300 and sold it for $400. Calculate the profit percentage.
Solution 1:
Cost Price (CP) = $300
Selling Price (SP) = $400
Profit (P) = SP - CP = $400 - $300 = $100
Profit Percentage = (Profit / CP) * 100 = ($100 / $300) * 100 = 33.33%
Example 2:
A vendor purchased a box of 50 pens for $20 and sold each pen at $1.50. Calculate the total profit or loss.
Solution 2:
Cost Price of 1 pen (CP) = $20 / 50 = $0.40
Selling Price of 1 pen (SP) = $1.50
Profit (P) = SP - CP = $1.50 - $0.40 = $1.10 (profit per pen)
Total Profit = Profit per pen * Number of pens sold = $1.10 * 50 = $55
Example 3:
A company bought a machine for $10,000, but due to its condition, it could only be sold for $8,500. Calculate the loss percentage.
Solution 3:
Cost Price (CP) = $10,000
Selling Price (SP) = $8,500
Loss (L) = CP - SP = $10,000 - $8,500 = $1,500
Loss Percentage = (Loss / CP) * 100 = ($1,500 / $10,000) * 100 = 15%
Example 4:
A bookshop bought a set of novels for $120 and sold it at a discount for $90. Calculate the loss percentage.
Solution 4:
Cost Price (CP) = $120
Selling Price (SP) = $90
Loss (L) = CP - SP = $120 - $90 = $30
Loss Percentage = (Loss / CP) * 100 = ($30 / $120) * 100 = 25%
Example 5:
A farmer sold a batch of vegetables for $800, making a profit of 25%. What was the cost price of the vegetables?
Solution 5:
Profit Percentage = 25%
Selling Price (SP) = $800
Let the cost price be CP.
Profit (P) = (Profit Percentage / 100) * CP
$800 - CP = (25 / 100) * CP
$800 = 0.25CP + CP
$800 = 1.25CP
CP = $800 / 1.25 = $640
These examples demonstrate how to calculate profit and loss amounts and percentages. It's essential to understand these concepts and practice various scenarios to become proficient in solving quantitative ability questions related to profit and loss. Additionally, real-life applications of these concepts include business calculations, pricing strategies, and investment decisions.
