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Profit and Loss: Formulas and Shortcuts

20-DEC-2017 17:59

     

    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:

    1. Cost Price (CP): The price at which goods have been bought by a retailer.
    2. Selling Price (SP): The price at which goods are sold by a retailer.

    Profit Formulas:

    Profit Formulas

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

    Learn the concept and formulas of Percentage

    Relation between CP, SP and Percentage Profit is,

     CP, SP, Profit

    Loss Formulas:

    Loss Formulas

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

    Learn to calculate profit sharing between partners

    Solved Example

    Here is an example to understand the percentage profit and loss formula:

    Example: 100 apples are bought at the rate of Rs. 500 and sold at the rate of Rs. 84 per dozen. What will be the percentage of profit and loss?

    Solution:         We will solve this in steps

    Step I:             Given that C.P. of 100 apples = 500

                        Profit and Loss

    Step II:         Also given that per dozen S.P. of apples = 84

                       Profit and Loss

    Step III:       Now, we know that 

                       Profit and Loss

    Therefore, there is a profit of 40% in the whole selling process.

    Marked price:

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

    Marked Price

    Relationship between marked price, discount and SP is the following:

    SP, MP and Discount

    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:

    Break Even Sales

    Profit & Loss based on break-even sales

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

    Profit&Loss and Break Even Sales


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