If you have been preparing for competitive exams you must be aware of the quantitative section syllabus. Profit and loss questions are one of the key concepts that one should be aware of because of the frequency of questions asked on this topic in any competitive exam. If you are not familiar with or if you are unaware of the key concepts behind profit and loss question then this blog will help you out with the key concepts and formulas required to solve questions on this topic. Acing the profit and loss questions can help you in getting a good score in the quantitative section which will help you in having an edge over others.
Profit and Loss Questions: Key Concepts and Formula
You must be aware of the basic terminology behind this topic but let us briefly go over the key terms involved in profit and loss questions.
- Cost Price (CP)- The actual cost paid for a product which includes taxes and other overhead expenses.
- Selling Price (SP)- The sum of money which is acquired while selling the product or the sum of money which is received for the product.
- Market Price (MP)- The price listed on the product.
- Profit– Profit is the sum of money acquired when the selling price is greater than the cost price. Profit= SP-CP.
Profit percentage is the percentage of profit made while selling a product, profit% = 100 x Profit/Cost Price.
- Loss– If the selling price is less than the cost price then the sum of money lost is called loss. Loss= CP- SP. Loss% =100x Loss/ Cost Price.
Other important formulas involved in this topic are:
- SP= [(100+ Gain%)/100]x CP
- SP=[(100-Loss%)/100]x CP
Profit and Loss Questions Asked in GMAT
GMAT has a couple of questions that are based on the concepts of profit and loss. Now that we have a basic understanding of profit loss concepts and we know the important formulas regarding the same, let us try solving some problems related to profit and loss questions.
Here are a few types of questions that appear in the GMAT exams:
- Profit or loss as a percentage of cost price
- Profit and loss as a percentage for sales price
- Profit or loss percentage as a percentage on the marked price
Example 1 of Profit and Loss Questions:
Question: If a man sold a table for Rs. 450. Find the cost price if he incurred a loss of 9%
Solution: Let’s apply the simple formula: CP=[(100-Loss%)/100]xSP
CP of the table = (100/91)x 450= 495
Therefore the cost price of the table is Rs. 495
Example 2 of Profit and Loss Questions:
Question: A woman buys some pencils at the rate of 20 for Rs. 40 and sells them at 10 for Rs. 35. Calculate the loss or gain percent.
Solution: CP of 20 pencils is Rs.40 therefore cost of 1 pencil will be Rs. 2
SP of 10 pencils is Rs. 35 therefore selling price of 1 pencil is Rs. 2.8
Gain= 2.8-2= 0.8
Gain%= 0.8/4×100 =10%
Example 3 of Profit and Loss Questions:
Question: A vendor sells his grocery by using weights that are 10% less than the true weights this results in him making a profit of 30%. Calculate the total gain percentage.
Solution: Considering that it is 1 kg of grocery bag. The actual weight is:
90% of 1000 gm = 900gm.
Now the cost price of each gram will be Re. 1.
Therefore, CP of each bag = Rs. 900.
SP of 1 kg of bag = 130% of the true CP
Therefore, SP = 130/100 x1000 = Rs. 1300
Gain = 1300 – 900 = 400
Hence Gain % = 400/900 x 100 = 44.44%
If you understand the basics of this concept then you can definitely ace the questions pertaining to this question. The formulas are easy and the calculations are not that difficult. The formulas discussed here will help you save time, and practice will definitely help you increase your probability of successfully attempting these questions.
Though we have provided you with all the information related to how to go about profit and loss questions, it is quite normal to feel unsure about whether the specific course is meant for you. But you don’t need to give into these doubts, let the counsellors at Leverage Edu help you in deciding what course is suited for your strengths.