Profit And Loss Concepts


Profit, loss, and discount concepts is majorly involved in business transactions. Its concept helps in solving different life situations. Basics in the percentage concept help in solving these problems easier. When a person is doing a business he involves in purchase and sales of items, obviously, his motto is to gain profit on the items and here he faces profit or loss in business.

Commonly Used Terms In Profit And Loss Concepts

cost price:

It is the price at which an article is purchased and represented as C.P.

Selling Price:

It is the price at which an article is sold and represented as S.P.

Marked Price:

It is the price of an article on the label and represented as M.P.


It is the reduction of price made on the marked price of an article.


If the selling price of an article is greater than the cost price then there is a profit/gain.
profit/gain = S.P – C.P


If the cost price of an article is more than selling price then there is a loss.
Loss = C.P- S.P

Overheads/Overhead expenses:

when an article is purchased additionally expenses such as labor charges, commissions, transport charges e.t.c are added to cost price. These expenses made are called overhead expenses.

Some Important Formulas Of Profit And Loss

  1. If S.P > C.P then there is a profit and profit = S.P – C.P
    Profit \ \% =\dfrac {profit}{C\cdot P}\times 100 \\ \\ = \dfrac { S.P – C.P }{C\cdot P}\times 100 \end{align*}
  2. If C.P > S.P then there is a loss and loss = C.P – S.P
    loss \ \% =\dfrac {loss}{C\cdot P}\times 100 \\ \\ = \dfrac { C.P – S.P }{C\cdot P}\times 100 \end{align*}
  3. If A sells an article to B at a% profit/loss and B sells it to C at b% profit/loss then, 
    Total profit/loss percentage is
    \begin{align*}\left( a\pm b\pm \dfrac {ab}{100}\right) \% \end{align*} use positive sign for profit
    use negative sign for loss.
  4. If the selling of two similar articles is the same. p% of profit and p% of loss is obtained by selling those articles then, 
    there is always a loss of 
    \begin{align*} \dfrac {P^{2}}{100}
  5. A dishonest shopkeeper sells his goods at cost price but uses false weights then

Profit % is
 \dfrac {Original \ weight-False \ weight}{False \ weight}\times 100 \end{align*}


Please enter your comment!
Please enter your name here