MBA Quantitative Aptitude Basic Concepts – Profit and Loss

Dear MBA Aspirants,

It is time that you brush up your concepts of ‘Profit and Loss’ topic from the arithmetic section. Out of the 8-10 questions which are expected from the arithmetic chapter in the CAT examination, profit and loss forms a significant portion in these questions. 

In addition, you can also expect an in-direct application of this topic in the Data Interpretation Section. Hence, this will serve the twin purpose simultaneously by preparing you for the Quantitative Aptitude Section, as well as the Data Interpretation Section.

Acquire a basic understanding of formulas of ‘Profit and Loss’ topic in order to obtain exceedingly well scores in the CAT, CMAT, MAT, XAT, IIFT, SNAP and many more exams.

Profit: When a product is sold, profit is the amount of money that one earns more than the money he actually spent in buying the product.

Loss: When a product is sold, profit is the amount of money that one earns lesser than the money he actually spent in buying the product.

Thus there are two terms involved in basic Profit and Loss. They are:

• Cost Price (CP)
• Selling Price (SP)

Profit Formulas:

Percentage loss is to be calculated always on CP unless required.

Marked price:

A certain percentage of the CP is added to itself to earn profit and this price is called marked price

Read Also: Concept Based Problems on Profit and Loss

Break even sales:

Profit and loss can be calculated in terms of break-even sales. Break even sales is the point in which one incurs neither profit nor loss in selling a number of units.

Formula for Break even sales:

Profit & Loss based on break-even sales

Now Profit and Loss can be calculated using Break even sales as follows:

Discount:

Discount means reduction of marked price to sell at a lower rate or means concession. It is calculated on the basis of marked price:

Selling Price = Marked price – Discount

Selling Price = Marked price (MP) – (% discount on MP)

Successive discounts:

Effective discount on a product after x% and y% of discount is given by:

Discount when you buy x products and get y products free is given by

Read Also: Solved Problems on Profit and Loss

We hope that these concepts along with their associated practice test would help you in your preparation of Profit and Loss chapter.

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