Quant (Concepts): Profit and Loss

Quant (Concepts): Profit and Loss

Cost Price (CP): The price paid to buy a particular product is called its cost price. Some overhead expenses such as transportation, taxes etc. are also included in the cost price.

Selling Price (SP): The sum of money received for the product.

Marked Price (MP): The price that is listed or marked on the product. This is also known as printed price/quotation price/invoice price/catalogue price.

PROFIT:

There is a gain in a transaction if the selling price is more than the cost price. The excess of the selling price to the cost price is called profit.

• Profit = Selling Price – Cost Price
   
• % Profit =  100 × Profit/Cost Price

LOSS:

When the selling price is less than the cost price there is loss in the transaction. The excess of cost price over the selling price is called loss.

• Loss = Cost Price – Selling Price
   
• % Loss = 100 × Loss/Cost price

Equal % profit & loss on the same selling price of two articles:

If two items are sold each at Rs X, one at a gain of p% and the other at a loss of p%, then the two transactions have resulted in an overall loss of p²/100%, and the absolute value of the loss is

Equal % profit & loss on the same cost price of two articles:

If the cost price of two items is X, and one is sold at a profit of p % and the other at a loss of p %, then the two transactions have resulted in no gain or no loss.

Trade Discount: To attract customers, it is a common practice to announce discount on the marked price of an article.

• Note: The discount is always taken as a % of the marked price, unless otherwise specified.

Example: Let the list price of an article be Rs. 450. A discount of 5% on its list price is announced.

Then, the new selling price = 450 × 95/100 = Rs 422.5.

Cash Discount: In addition to trade discount, the manufacturer may offer an additional discount called the Cash Discount if the buyer makes full payment within a certain specified time. Cash Discount is usually offered on the net price (the price after subtracting discount from the marked price).

Therefore, Cash Price = Net Price - Cash Discount

• Note: Cash discount is always calculated on net price, unless otherwise specified.

Wrong Weight: When a tradesman claims to sell at cost price, but uses a false weight, then the percentage profit earned

 

Successive Discounts: When a tradesman offers more than one discount to the customer, then the total discount offered is calculated by applying the method of decimals learned in the topic of percentages.

Example:  A tradesman offers two successive discounts of 20 % and 10 %. Calculate the gross discount offered by the tradesman.

After a discount of 20%, we are left with 80% or 0.8. Further, after applying a discount of 10%, we are left with 90% or 0.9.

The total discount is calculated as: 1- (0.8 × 0.9) = 0.28. Hence, there is a total discount of 28%.

When the SP of x articles is equal to CP of y articles, what is the profit percent earned?