Profit Loss Formula

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Profit and loss formulas are used to calculate the profit or loss that has been made by selling a particular product. The profit and loss formulas majorly find application in business and financial transactions. Profit and loss as a percentage is generally a measure to depict how much profit or loss a trader incurred from any particular deal.

  • When the selling price of any product sold is greater than the cost price (the price at which the product was originally bought), gain or profit is made.
  • When the selling price of any product sold is lesser than the cost price (the price at which the product was originally bought), the loss is made.

What Is the Profit Loss Formula?

Profit Formula for a given cost price and selling price of any article can be expressed as:

Profit = Selling price - Cost price

or,

Profit = S.P. - C.P.

Loss Formula for a given cost price and selling price of any article can be expressed as:

Loss =  Cost price - Selling price

or,

Loss = C.P. - S.P.

Formula to calculate profit or loss

 

 

 

 

 

 

 

Some other important formulas related to profit and loss are:

  • Profit percentage(P%) = (Profit /Cost Price) × 100
  • Loss percentage(L%) = (Loss / Cost price) × 100
  • S.P. = {(100 + P%)/100} × CP
  • S.P. = {(100 – L%)/100} × CP
  • C.P. = {100/(100 + P%)} × SP
  • C.P. = {100/(100 – L%)} × SP

Solved Examples Using Profit Loss Formula

Example 1: 

A shopkeeper buys juice cans in bulk for $30 each. He sells them for $25 each. Calculate the loss and the loss percentage.

Solution:     

To find: Loss and Loss Percentage 

Given:

Selling price = $30

Cost price = $25

Using Loss Formula,

Loss = $30 - $25

= $5

Using Loss Percentage Formula,

Loss Percentage = \(\dfrac{5 \times 100}{25}\)

= 20%

Answer:  Loss on the given purchase and sale is $5 and loss percentage is 20%.

 

Example 2: 

On selling a table for $987, Jane loses 6%. For how much did he purchase it?

Solution:       

To find: Cost price of the table

Given: 

Loss Percentage = 6%

S.P. = $987

If the loss is 6%, it means that if the cost price is $100, the loss incurred is $6.

S.P. when C.P. is $100 = C.P. - Loss

= 100 - 6

= $94

C.P. when S.P. is $94 = $100

CP when SP is $987 = 100/94 × 987 = $1050                              

Answer:  Cost price of the table = $1050