Total Gadha-Profit and Loss

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Profit and Loss, Discount

by Total Gadha - Thursday, 5 April 2007, 03:03 AM

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.

Your earnings = $200 + $400 = $600. Your spending = $100 + $300 = $400.

Therefore, the amount earned by you = $600 - $400 = $200. Here's the first rule of profit and loss.

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 EXACTLY 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 CP, 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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this week.

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Re: Profit and Loss, Discount

by Decem ber Year - Wednesday, 11 April 2007, 05:23 PM

P & L looks dicounted now

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by Total Gadha - Wednesday, 11 April 2007, 08:05 PM Hi Decem ber Year,

I hope it's an "all profit, no loss" discount. Total Gadha

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by RAJAT SAGAR - Saturday, 14 April 2007, 02:03 PM great help TG!! thanx dude!

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by Total Gadha - Sunday, 15 April 2007, 06:29 AM Hi Rajat,

Good that you found it useful. Total Gadha

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by Nitya S - Thursday, 19 April 2007, 02:18 PM

Hi TG,

Thanks for the help

i will go do the p&l again today. I sincerely believe this will increase m y score in this area to a good extent. thanks again,

Nitya

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by paras udani - Sunday, 22 April 2007, 12:13 AM

hie tg..its been very helpful for m e...but can u plz include sum m ore sum s....so tht i can practice m ore precisely as explanation is also given to m e....

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by Total Gadha - Sunday, 22 April 2007, 03:06 AM Hi Paras,

Check the quizzes on the m ain page for m ore problem s. Total Gadha

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by flyto gm at - Wednesday, 30 May 2007, 09:28 PM

Hi TG,

This is in ref to solved exam ple num ber 5. As soon as I read, " A retailer cheats both, while buying and selling goods", I start thinking that he is m aking profit on both transactions. Further reading the question reveals that "he uses a balance that shows 1000g when the actual quantity is 1100g". So, it gets confirm ed that there is som e profit involved here.

Should this not be considered as a part of overall profit?

Your approach suggests that you have considered the m oney spent, that is 1000 and then the m oney earned that is 1210 for calculating profit. But, this is only the second transaction. The first transaction where it is visible that the retailer is procuring the 1.1 goods at the price of 1 goods is not considered.

Please explain... Regards

f2g

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by Total Gadha - Thursday, 31 May 2007, 07:56 AM Hi flytogm at,

While buying, the retailer hasn't "earned" any m oney. He has only recieved m ore quantity for the sam e am ount of m oney. The earnings on that extra quantity shows while selling. To avoid confusion like these only I ask you to ignore the interm ediate transaction and just calculate the am ount spent and am ount earned in the end.

Total Gadha

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by rajat tiwari - Wednesday, 13 June 2007, 12:45 AM the exercise was really very good

thanks

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by am ir khan - Friday, 20 July 2007, 10:36 PM

see example 2 on marked price...profit and loss

by giving discount of 20 percent...?

now there is a formula of successive percentage

a+b+(ab/100)

using that formula we get 20+20+(20*20/100)=44

....nw my prob...

look at example 2 after rule 3

if we use the same formula we get

-6.25+12.5+(-6.25*12.5/100)

but this is not equal to 7.14 percent ..where am i getting wrong???

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by Total Gadha - Saturday, 21 July 2007, 02:08 AM

The second one is not a case of successive percentage increase/decrease.

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by am ir khan - Saturday, 21 July 2007, 12:31 PM

fundam entals quantitative aptitude..career launcher...chapter..percentages

topic-faulty balances..

exam ple44..a weighing balance shows 900 gm for 1 kg.what is net profit percentage if the trader m arks-up his cost price by 20%?? solution:initially there is a loss of 10% because of defect in weighing balance.as there is a m ark up of 20%,net profit (a+b+(ab/100) =-10+20-(10*20/100)=8%

therefore there is a net profit of 8%...

now how this prob is different from ur last reply!!

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by Total Gadha - Saturday, 21 July 2007, 01:19 PM

In your exam ple there is a 10% loss because of faulty weight. In m y exam ple the shokeeper is gaining because he is using 6.25% less weight (selling 87.5 g as 100 g). calculate the gain percent in this case.

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by am ir khan - Sunday, 22 July 2007, 11:50 AM

sorry sir,but i am unable to understand what you are saying....

your reply was-"In your exam ple there is a 10% loss because of faulty weight. In m y exam ple the shokeeper is gaining because he is using 6.25% less weight (selling 87.5 g as 100 g). calculate the gain percent in this case." ...

now it was not 6.25 percent less weight but 12.5 percent less weight so i m ust put positive sign for 12.5 and negative sign for 6.25 ...in this way i will again get the sam e answer as i have solved above...sir please solve this problem using a+b+(ab/100) concept(as i have shown you in above exam ple that your question is also successive percentage type question as can be seen from career launcher guide exam ple)

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by Total Gadha - Monday, 23 July 2007, 10:12 AM

sorry for that typo of 6.5. But no, you do not need to use 12.5. Figure it out. If som e sells 87.5 g for 100 g, what is the gain percent? It's not 12.5.

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by am ir khan - Monday, 23 July 2007, 07:44 PM

obviously you are right that profit percentage is not 12.5..but....

if we visit our career launcher question and solution again,what we would find is that they have also not calculated profit percentage... ok tell m e difference between your question and career launcher question.

career launcher question:a weighing balance shows 900 gm for 1 kg.what is net profit percentage if the trader m arks-up his cost price by 20%?? ur question:a dishonest shopkeeper sells goods at a price 6.25% less than cost price but uses 12.5% less weight.what is is profit percentage?

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by RIDHIMA CHOPRA - Monday, 29 October 2007, 04:32 PM

thanx tg sir

could plz solve som e m ore problem s on faulty weights like the last one

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by sunil garg - Friday, 27 June 2008, 11:55 AM

you are the master....

faulty weights qns were always a nightnmare for me but now they are my sitters thanx ji carry on gr8 work...

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by Sid J - Monday, 15 Septem ber 2008, 08:27 PM

You are great!!! Great online tutorial. Math topics m ade easy. Keep up the good work buddy.

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by Raunak Mehta - Tuesday, 16 Septem ber 2008, 09:33 AM Good One!!!!!....rather short way to get ur basics right

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by Rahul Sinha - Monday, 22 Septem ber 2008, 02:42 PM

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)

6)On selling tea at Rs 40 per kg a loss of 10% is incurred.Calculate the amount of

tea (in kg) sold if the total loss incurred is Rs 80.

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

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by rahul Sukhija - Monday, 30 March 2009, 07:48 PM Nice post....

keep up the good work....

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by punit goyal - Monday, 13 April 2009, 05:01 AM

form ula is a+b-(ab/100)

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by bhavika bali - Saturday, 23 May 2009, 11:19 PM hey guyss

could you please help m e in getting the logic of the second solved exam ple of the p&l part(oranges one)..i am not able to get the logic... waiting for your help....

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by Ashok Am sam ani - Wednesday, 27 May 2009, 10:08 AM Really fantastic discussion... Please keep posting m ore and m ore

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by vikas sharm a - Wednesday, 3 June 2009, 12:40 PM

Hi rahul

sol of ur ques no2 is

let CP=rs100, then SP=117(as profit 17%) m arker price(1-discount/100)=S.P MP*0.9=117

MP=130 so ans is 30%

---ques 4->>>>let cost price is rs1/gram let he bought 950g so total CP=rs950 total SP=1000

so profit=50/950)*100

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by am it bhoir - Saturday, 6 June 2009, 05:28 PM

hi rahul

is answer of problem 1 is Rs 5.1

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by abhishek tripathi - Friday, 21 August 2009, 02:08 AM

hi tg sir..thx once again 4 dis awesom e article tell m e where is da link 2 patnership and aevrage m ixture and aleegations.thx

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by Varun Agrawal - Thursday, 3 Septem ber 2009, 06:33 PM Hi Rahul,

I got these as the answers of the questions you posted. See if they are correct. 1. Rs. 5.5 2. 11.1% 3. 1.02% 4. 5.2% 5. Rs. 40.5 6. 18.18 Kgs 7. Rs. 200

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8. 6.01%

9. Rs. 3.25 Regards Varun

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by ram an goyal - Friday, 4 Septem ber 2009, 12:10 AM thnxx buddy .... u have done a g8t job...

wtng 4 som e m ore..

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by Netra Mehta - Sunday, 13 Septem ber 2009, 11:00 AM Hey All...

Plz solve this question..

The cost price of a pair of shoes is increased by 18%. A trader who revised the selling price of the pair of shoes to m aintain the sam e profit percentage noted that he got Rs. 9 m ore than the earlier profit by selling one pair of shoes. What was the earlier profit?

1Rs.36 2Rs.45 3Rs.50 4Rs.54

5Cannot be determ ined

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by Akash Gaurav - Thursday, 8 October 2009, 09:59 PM Hey Neha,

Here is your reply:

Lets assum e that the CP of a pair of shoes is Rs x, the profit percentage is z% and the actual profit is Rs y. Then, x * z/100 = y ---- (1)

After increase in CP, Cost price = x+(18*x/100) = 1.18x Now the profit = Rs (y+9)

Then, 1.18x*z/100 = y+9 --- (2)

If you divide equation (1) and (2), x and z will get elim inated and you will be able to find the value of y which is the original profit. A ns: Rs 50

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by ROHIT K - Friday, 9 October 2009, 10:57 PM Hi Netra,

Let the cost price of a pair of shoes be Rs. 100. After increase of 18% the cost price becom es Rs. 118. Now for cost price of Rs. 100 , let profit be Rs. x Therefore, for cost price of Rs. 118 profit will be Rs. x+9 Solving we have,

(x+9)/x = 118/100=59/50 x=50

Therefore earlier profit is Rs. 50 Option 3

Rohit

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by Vinayak Mishra - Wednesday, 21 October 2009, 12:07 PM Thank You,TG and Team for Refreshing P&L.

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by reem a kharbanda - Wednesday, 18 Novem ber 2009, 12:00 AM

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by Pallav Jain - Wednesday, 18 Novem ber 2009, 12:17 AM hi Reema !

see what happened is he paid for 1000 gm. but actually got 1100 gm. So his profit % is 100/1000 == 10 % now same thing happened at the time of sale he sold 1000 gm but took money for 1100 gm. same profit is 10%. now I can explain in detail but I know you will get it easily.

Always remember that in case of Faulty balances there are 2 cases as mentioned above. after calculation both %tages simply apply this formula

a+b+ab/100 so here is 10+10 ( 100/100) = 21%

Hope It was understandable. Cheers !!!!!

Pallav

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by reem a kharbanda - Wednesday, 18 Novem ber 2009, 12:46 AM thnks pallav...

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by Pallav Jain - Wednesday, 18 Novem ber 2009, 01:33 AM oh need not t beee !!!!!!

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by Dev Raj - Sunday, 2 May 2010, 09:14 PM

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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by afroz m - Saturday, 22 May 2010, 07:37 PM Hi,

Thanks a ton...

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by Rahul Bhat - Saturday, 14 August 2010, 11:58 AM

Concept explained are very lucid. thanks a lot TG.

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by chaitanya bollineni - Monday, 16 August 2010, 11:50 PM HI Sir,

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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.

When i click on CBT Club it goes to the hom e page of CBT Club..

why don't you allow CBT club Students to Directly go to forum of respective quiz which has questions related to topic which was discussed.So that we can com plete that topic.

Thanku sir..

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by stg jindal - Thursday, 16 Decem ber 2010, 07:31 PM

awesome article, the entire topic seems to be crystal clear now.

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by saanthwana T - Tuesday, 29 March 2011, 06:50 PM Hello sir,

This article on Profit and Loss is really good.

Could you please post an article on Partnerships also so that all the topics related to this are com pleted? saanthwana

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by rahul m ichan - Thursday, 7 April 2011, 09:04 AM

hello hi and thank you for your nice article ...really thanks

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by Parijat Singh - Thursday, 29 Septem ber 2011, 08:28 AM Change value = change valu 18 =9 100 =50 So ans is 50

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by Sirius Black - Friday, 7 October 2011, 06:22 PM Hi Sir..

I need to ask you one question regarding the solved exam ple 5. When I did that question by m yself.. I arrived at 10% profit. I'm m entioning m y assum ptions and m ethod. I'm unable to detect the flaw. Please help.

I assum ed that he bought 1100g for Rs. x. Now he sold 1000g for Rs. x.

Had he sold all the am ount, he would have got x/1000 X 1100= 1.1x Now his profit % is = (1.1x - x)/x X 100= 10%

Please let m e know if I can sell 1000g for Rs.x or not. Thank you.

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by King Casanov - Tuesday, 1 Novem ber 2011, 03:45 PM

@TG saar pls clear m y doubt....In exam ple of Marked price , the answer says it is 44% greater than selling price...shouldnt it be 44% greater than COST PRICE ?...I m ean 144= 1.44CP

thanks...

The KING

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by TG Team - Tuesday, 1 Novem ber 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

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by Prerna Golani - Friday, 11 May 2012, 05:03 PM

.a weighing balance shows 900 gm for 1 kg.what is net profit percentage if the trader m arks-up his cost price by 20%??

solution:initially there is a loss of 10% because of defect in weighing balance.as there is a m ark up of 20%,net profit (a+b+(ab/100) =-10+20-(10*20/100)=8%

therefore there is a net profit of 8%... how initially loss is 10%

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by cat m e - Friday, 8 June 2012, 04:58 PM

Thnx TG,

These post's are a gift to all....

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by Rim zim Basu - Thursday, 17 January 2013, 02:37 PM

I have always been a Total Gadha in m aths but this article helped m e understand a lot. Thanks TG. But, I couldn't understand Solved exam ple-4 (oranges problem ). Som eone please explain the logic.

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by anand chokshi - Monday, 21 January 2013, 03:29 PM Hey please help to solve this question..

A shopkeeper bought certain no articles at 1200 rupees and sold 1/4th at loss of 10%. what should be the profit percentage of rem aining stock to earn 10% profit on overall articles?

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by am resh kum ar - Saturday, 26 January 2013, 10:54 PM Take 4 articles so CP of each article = 300

loss due to 1/4th i.e. 1 article = 30 Overall profit = 10% = 120

Let profit on each rem aining 3 articles = x 120 = 1 * (-30) + 3 * x

x = 150/3 = 50

so profit on each rem aining stock = (50/300)* 100 = 16.67% However if u want the answer in one line (average)

10% = (-10% *1 + x% * 3 ) /4 x =(50/3)%

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by vivek 231 - Tuesday, 29 January 2013, 04:13 PM

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now it is given that u shuld get overall profit of 10% ,which m eans u shuld get 1320 at the end

it is given 1/4 of the articles are sold in 10% loss now consider the desired percentage be y 1/4*x*0.90*1200/x + 3/4*x*y*1200/x =1320

now x will get cancelled and solve the eqquation for getting the percentage req i think the ans is 17%

hope it's right

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