Profit & Loss- Basic concept and Shortcut tricks

Profit, Loss and Discount:

Cost Price: CP is the cost at which item is purchased.

Selling Price: SP is the cost at which item is sold.

Profit/Loss: This is the difference between selling price and cost price. If the difference is positive then it is called Profit. It the difference is negative then it is called Loss.

Profit= Selling price (SP)-Cost Price (CP)

Loss= Cost price (CP)-SP (Selling price)

Marked Price: This is the price of products as displayed on label.

Discount: This is the reduction given on marked price before selling to customer.

Mark-up: This is thr increment on the cost price before being sold to customer.

Thus Profit %= Profit/CP X 100

 or

loss %= Loss/CP X 100

SP= CP+ P% OF CP

SP=CP (1+P/100)

SP=CP X MF (Multiplying Factor)

MF in case of profit will be more than 1 and in case of loss will be less than 1.

Thus MF=SP/CP So By this one can easily find profit or loss percentage.  Profit or loss is always calculated on CP not SP.

  • If there is gain of P% then our calculating figure would be 100 and (100+P)
  • If there is loss of P% then our calculating figure would be 100 and (100-P)
  • If required value is more than supplied value then MF would be= 100+P/100 OR 100/100-P(more than 1)
  • If required value is less than supplied value then MF would be= 100/100+P OR 100-P/100(less than1)
  • If an article is sold at a gain of 40% then SP=140% OF CP
  • If an article is sold at a loss of 40 % then SP= 60% OF CP

Lets see one example

If A buys a toy for Rs 49 and sells it to B for Rs 56 then find his Percentage profit or loss?

Profit= SP-CP/CP *100

Percentage profit= 56-49/49 *100

= 14.28%

Alternatively One can find MF= 56/49=1.14 i.e. profit percentage of 14.28%

Concept of Faulty balance:

If a trader possess to sell his goods at cost price , but uses false weight then

Gain= [Error/(True value-Error)   *  100]%

In this case Multiplying Factor because of cheating on volume

MF = Amount charged for (reading)/Actual sold

When a person sells two similar item, one at a gain of p % and the other at a loss of p%, then the seller always incurs a loss given by

Loss=( common loss and gain/10)2

 

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