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Profit Formulae

Profit formula is used to know how much profit has been made by selling a particular product. Formula for profit is majorly used for business and financial transactions. Profit arises when the selling price of any product sold is greater than the cost price (that is the price at which the product was originally bought). It should be noted that the profit and loss as a percentage is generally used to depict how much profit or loss a trader gets from a particular deal.




The Profit Formulas are given as:

Formula for ProfitProfit = S.P – C.P.
Formula for Profit PercentageProfit Percent Formula = Profit×100C.P.
Gross Profit FormulaGross Profit = Revenue – Cost of Goods Sold
Profit Margin FormulaProfit Margin = TotalIncomeNetSales×100
Gross Profit Margin FormulaGross Profit Margin = GrossProfitNetSales×100
  • S.P. = Selling Price i.e. the cost at which the product is sold
  • C.P. = Cost price i.e. the cost at which the product is originally bought


Example:-

Question: A shopkeeper buys watches in bulk for Rs. 20 each. He sells them for Rs. 45 each. Calculate the profit and the profit percentage.

Solution:

Given,

Selling price of the watch = Rs. 45

Cost price of the watch = Rs. 20

Now, Profit = Selling Price – Cost Price

So, profit on the watch = 45 – 20 = Rs. 25

Using the formula for profit percentage,

Profit % = (Profit / C.P.) × 100

So, the profit percentage of the shopkeeper will be (25 / 20) × 100 = 1.25 × 100 = 125%.

It can be said that the shopkeeper made a profit of Rs. 25 from each watch with a profit percentage of 125%.


 


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