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Profit and Loss PDF
Profit and Loss PDF
Profit and loss calculations are extensions of percentage only with a few twists thrown in because of play of words. In standard MBA exams,
approaching these problems in a straight and simplified manner can save you from puzzlement.
I will start this chapter by giving two problems on profit and loss:
Problem 1: you have decided to make a donkey out of me. You buy a widget for $100 and sell it to me for $200. You buy it back from me
for $300 and then sell it back to me for $400. Have you made any profit in this process? If yes, how much.
Answer: If you said "no profit no loss" or "$100" you're in for a surprise. Let's see how much you earned in the process and how much
spent.
Problem 2: Here is an old puzzle: There are two shopkeepers having shops side by side. The first shopkeeper sells bicycles. He sells a
bicycle worth $30 for $45. One day a customer comes and buys a bicycle. He gives a $50 note to the shopkeeper. The shopkeeper doesn't
have change so he goes to the second shopkeeper, gets the change for $50, and gives $5 and the bicycle to the customer. The customer
goes away. The next day the second shopkeeper comes and tells the first shopkeeper that the $50 note is counterfeit and takes his $50
back. Now, how much does the first shopkeeper lose?
Answer: The answer to this tricky problem can be found easily if you consider the first shopkeeper as a system. From the second
shopkeeper he took $50 and gave back $50 so there was no profit no loss. To the customer he gave $5 + $30 bicycle. Therefore, his total
loss is $35, as shown below:
Now, here's the second rule of profit and loss, and it is EXAC TLY similar to the first rule:
Why am I stressing on this rule? Because if you need to pass through the maze of words which present a profit and loss problem, you will
have to perform the simple arithmetic of calculating the total amount gained and total amount spent.
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Now here are some terms associated with profit and loss:
NOTE: the profit percentage and the loss percentage are always calculated on C P, unless stated otherwise.
There's one more term you should get familiar with in profit and loss. Suppose a shopkeeper buys a product for Rs100 and he wants to earn
a profit of 20% on this product. Therefore, he would like to sell the product at Rs120. But a customer wants a discount on the price. If the
customer gives a discount on selling price of Rs120, his profit will decrease. Therefore, the shopkeeper prices the product at a price which is
higher than Rs120. Now when the shopkeeper gives discount, the price again falls to Rs120 and the shopkeeper maintains his profit
percentage. The hiked price, above the selling price, on which discount is given is known as the Marked Price. See the figure below:
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Before we continue with more problems, here is the most important rule to solve profit and loss problems:
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I shall have to end here and leave the rest of it for my CBT Club students. I shall cover some problems based on this in
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the CBT Club this week.
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Reply
Hi De ce m be r Ye ar,
Total Gadha
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Hi R ajat,
Total Gadha
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Hi TG,
i will go do the p&l again today. I since re ly be lie ve this will incre ase m y score in this are a to a good e x te nt.
thank s again,
Nitya
hie tg..its be e n ve ry he lpful for m e ...but can u plz include sum m ore sum s....so tht i can practice m ore pre cise ly as e x planation is also give n to
m e ....
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Hi Paras,
Total Gadha
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Re: Profit and Loss, Discount
by flyto gm at - W e dne sday, 30 May 2007, 09:28 PM
Hi TG,
This is in re f to solve d e x am ple num be r 5. As soon as I re ad, " A re taile r che ats both, while buying and se lling goods", I start think ing that he
is m ak ing profit on both transactions. Furthe r re ading the que stion re ve als that "he use s a balance that shows 1000g whe n the actual quantity is
1100g". So, it ge ts confirm e d that the re is som e profit involve d he re .
Your approach sugge sts that you have conside re d the m one y spe nt, that is 1000 and the n the m one y e arne d that is 1210 for calculating profit.
But, this is only the se cond transaction. The first transaction whe re it is visible that the re taile r is procuring the 1.1 goods at the price of 1 goods
is not conside re d.
R e gards
f2g
Hi flytogm at,
W hile buying, the re taile r hasn't "e arne d" any m one y. He has only re cie ve d m ore quantity for the sam e am ount of m one y. The e arnings on that
e x tra quantity shows while se lling. To avoid confusion lik e the se only I ask you to ignore the inte rm e diate transaction and just calculate the
am ount spe nt and am ount e arne d in the e nd.
Total Gadha
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thank s
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a+b+(ab/100)
....nw my prob.....
-6.25+12.5+(-6.25*12.5/100)
The se cond one is not a case of succe ssive pe rce ntage incre ase /de cre ase .
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Re: Profit and Loss, Discount
by am ir k han - Saturday, 21 July 2007, 12:31 PM
fundam e ntals quantitative aptitude ..care e r launche r...chapte r..pe rce ntage s
e x am ple 44..a we ighing balance shows 900 gm for 1 k g.what is ne t profit pe rce ntage if the trade r m ark s-up his cost price by 20%??
solution:initially the re is a loss of 10% be cause of de fe ct in we ighing balance .as the re is a m ark up of 20%,ne t profit (a+b+(ab/100)
=-10+20-(10*20/100)=8%
In your e x am ple the re is a 10% loss be cause of faulty we ight. In m y e x am ple the shok e e pe r is gaining be cause he is using 6.25% le ss we ight
(se lling 87.5 g as 100 g). calculate the gain pe rce nt in this case .
Show parent | Reply
your re ply was-"In your e x am ple the re is a 10% loss be cause of faulty we ight. In m y e x am ple the shok e e pe r is gaining be cause he is using
6.25% le ss we ight (se lling 87.5 g as 100 g). calculate the gain pe rce nt in this case ." .....
now it was not 6.25 pe rce nt le ss we ight but 12.5 pe rce nt le ss we ight so i m ust put positive sign for 12.5 and ne gative sign for 6.25 ...in this way
i will again ge t the sam e answe r as i have solve d above ...sir ple ase solve this proble m using a+b+(ab/100) conce pt(as i have shown you in
above e x am ple that your que stion is also succe ssive pe rce ntage type que stion as can be se e n from care e r launche r guide e x am ple )
sorry for that typo of 6.5. But no, you do not ne e d to use 12.5. Figure it out. If som e se lls 87.5 g for 100 g, what is the gain pe rce nt? It's not
12.5.
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obviously you are right that profit pe rce ntage is not 12.5..but....
if we visit our care e r launche r que stion and solution again,what we would find is that the y have also not calculate d profit pe rce ntage ...
ok te ll m e diffe re nce be twe e n your que stion and care e r launche r que stion.
care e r launche r que stion:a we ighing balance shows 900 gm for 1 k g.what is ne t profit pe rce ntage if the trade r m ark s-up his cost price by 20%??
ur que stion:a dishone st shopk e e pe r se lls goods at a price 6.25% le ss than cost price but use s 12.5% le ss we ight.what is is profit pe rce ntage ?
thanx tg sir
could plz solve som e m ore proble m s on faulty we ights lik e the last one
faulty weights qns were always a nightnmare for me but now they are my sitters
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You are gre at!!! Gre at online tutorial. Math topics m ade e asy. Ke e p up the good work buddy.
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Hi TG's,
I am having problem in below questions.Among few of them i was able to crack in but wanted to know the basics about
those that's why posting it.
1)A manufacture estimates that on inspection 12% of the articles he produces will be
rejected.He accepts an order to supply 22000 articles at Rs 7.50each.he estimates the profit on his outlay including
the manufacturing of rejected articles to be 20%.
Find the cost of manufacturing each article.
2)In order to maintain the price line a trader allows a discount of 10% on the marked
price of goods in his shop.Howerver,he still makes a gross profit of 17% on the cost price.
Find the profit percent he would have made on the selling price had he sold at the
marked price.
3)A man buys 50kg of oil at Rs 10 per Kg and another 40kg of oil at Rs 12 kg and mixes
them.He sells the mixture at the rate of Rs 11per kg.What will be his gain percent
if he is able to sell the whole lot.
4)A shopkeeper sells sugar in such a way that the selling price of 950gn is the same
as the cost price of 1kg.Find his gain percent?
5)A dealer buys eggs at Rs 36 per gross.He sells the egg at a profit of 12(1/2)% on the cost price What is the selling
price per egg(Approximately)
7)A merchant baught two transistor which together cost him Rs 480.He sold one of them
at a loss of 15% and other at a gain of 19%.If the selling price of both the
transistor are equal.Find the cost of lower price transistor.
8)A manufacture makes a profit of 15% by selling a color TV for Rs 5750.if the cost of
manufacturing increase by 30% and the price paid by the retailer is increased by 20%,
Find the profit percent made by manufacture.
9)A reduction is the price of petrol by 10% enables a motorist to buy 5gallons more for
$180.Find the original price of petrol.
Regard's
Rahul
Nice post....
k e e p up the good work ....
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Re: Profit and Loss, Discount
by punit goyal - Monday, 13 April 2009, 05:01 AM
he y guyss
could you ple ase he lp m e in ge tting the logic of the se cond solve d e x am ple of the p&l part(orange s one )..i am not able to ge t the logic...
waiting for your he lp....
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Hi rahul
MP*0.9=117
MP=130
so ans is 30%
--------------------------------------
total SP=1000
so profit=50/950)*100
hi rahul
hi tg sir..thx once again 4 dis awe som e article te ll m e whe re is da link 2 patne rship and ae vrage m ix ture and ale e gations.thx
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Hi R ahul,
I got the se as the answe rs of the que stions you poste d. Se e if the y are corre ct.
1. R s. 5.5
2. 11.1%
3. 1.02%
4. 5.2%
5. R s. 40.5
6. 18.18 Kgs
7. R s. 200
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8. 6.01%
9. R s. 3.25
R e gards
Varun
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He y All...
Plz solve this que stion..
The cost price of a pair of shoe s is incre ase d by 18%. A trade r who re vise d the se lling price of the pair of shoe s to m aintain the sam e profit
pe rce ntage note d that he got R s. 9 m ore than the e arlie r profit by se lling one pair of shoe s. W hat was the e arlie r profit?
1R s.36
2R s.45
3R s.50
4R s.54
5C annot be de te rm ine d
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He y Ne ha,
He re is your re ply:
Le ts assum e that the C P of a pair of shoe s is R s x , the profit pe rce ntage is z% and the actual profit is R s y.
If you divide e quation (1) and (2), x and z will ge t e lim inate d and you will be able to find the value of y which is the original profit.
A ns: Rs 50
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Hi Ne tra,
Solving we have ,
(x +9)/x = 118/100=59/50
x =50
O ption 3
R ohit
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hi..cud u plz e x plain the no.5 sum re garding faulty we ights in buying and se lling in m ore de tail???
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Show parent | Reply
hi Reema !
see w hat happened i s he pai d for 1000 gm. but actually got 1100 gm. So hi s profi t % i s 100/1000 == 10 %
now same thi ng happened at the ti me of sale he sold 1000 gm but took money for 1100 gm. same profi t i s 10%.
now I can explai n i n detai l but I know you w i ll get i t easi ly.
Alw ays remember that i n case of Faulty balances there are 2 cases as menti oned above.
after calculati on both %tages si mply apply thi s formula
Hope It w as understandable.
Cheers !!!!!
Pallav
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thnk s pallav...
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oh ne e d not t be e e !!!!!!
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Hello TG sir,
Tonnes of Thanks for the lesson. Reading was never fun until I landed on TG.
Sir, I cud not find any lesson on Ratio and proportion.
If there is any such lesson, Then can u pls let me the link.
Proud to be a TGite.
Thanks a ton sir
Regards
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Hi,
Thank s a ton...
Show parent | Reply
HI Sir,
I Should have poste d this be fore ...
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I shall have to end here and leave the rest of it for my CBT Club students. I shall cover some problems based on this in
the CBT Club this week.
Thank u sir..
He llo sir,
This article on Profit and Loss is re ally good.
C ould you ple ase post an article on Partne rships also so that all the topics re late d to this are com ple te d?
saanthwana
he llo hi and thank you for your nice article ........re ally thank s
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Hi Sir..
I ne e d to ask you one que stion re garding the solve d e x am ple 5. W he n I did that que stion by m yse lf.. I arrive d at 10% profit. I'm m e ntioning
m y assum ptions and m e thod. I'm unable to de te ct the flaw. Ple ase he lp.
@TG saar pls cle ar m y doubt....In e x am ple of Mark e d price , the answe r says it is 44% gre ate r than se lling price ...shouldnt it be 44% gre ate r
than C O ST PR IC E ?...I m e an 144= 1.44C P
thank s...
The KING
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Re: Profit and Loss, Discount
by TG Te am - Tue sday, 1 Nove m be r 2011, 03:49 PM
Yes King
You are absolutely correct. It should be read as 44% more than cost price in place of selling price.
Kamal Lohia
.a we ighing balance shows 900 gm for 1 k g.what is ne t profit pe rce ntage if the trade r m ark s-up his cost price by 20%??
solution:initially the re is a loss of 10% be cause of de fe ct in we ighing balance .as the re is a m ark up of 20%,ne t profit (a+b+(ab/100)
=-10+20-(10*20/100)=8%
Thnx TG,
I have always be e n a Total Gadha in m aths but this article he lpe d m e unde rstand a lot. Thank s TG. But, I couldn't unde rstand Solve d e x am ple -
4 (orange s proble m ). Som e one ple ase e x plain the logic.
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A shopk e e pe r bought ce rtain no article s at 1200 rupe e s and sold 1/4th at loss of 10%. what should be the profit pe rce ntage of re m aining stock
to e arn 10% profit on ove rall article s?
Show parent | Reply
120 = 1 * (-30) + 3 * x
x = 150/3 = 50
10% = (-10% *1 + x % * 3 ) /4
x =(50/3)%
le t us conside r the no of article s as x and the price of e ach article will be 1200/x
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now it is give n that u shuld ge t ove rall profit of 10% ,which m e ans u shuld ge t 1320 at the e nd
now x will ge t cance lle d and solve the e qquation for ge tting the pe rce ntage re q
i think the ans is 17%
MBA C AT GMAT
Y ou are not logged in. (L ogin)
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