Profits and Loss are the only terms you should ever hear when speaking of the finance section of a business. It is vital that these terms are understood. The financial situations of companies can greatly affect the overall results. Any changes should be analyzed and recorded. Any problems should be immediately repaired in order to avoid further problems for the owners and future investors.

A profit and loss analysis are an essential tool for understanding the profitability of a business. This is used for making a business more profitable and less prone to failure or bankruptcy. Proper evaluation of the current and future profits should be considered, along with any projected changes. There are many reasons why a company might experience losses, and the analysis provides the necessary information to understand these causes.

Profit Definition –

The profit made by buying an article at a lower price and selling at a higher price is called profit. For example, we bought an item for 100 rupees and sold it for 120 rupees, then we would get a profit of 20 rupees.

Profit Formula –

To take advantage of an item, we subtract the cost price from the selling price of that item. The selling price of the commodity will be higher than the cost price of the item to make a profit.

Profit = S.P. – C.P.

Loss Definition –

Losses caused by buying an article for a higher price and selling it at a lower price are called losses. For example, if we bought an item for Rs 100 and we sold it for Rs 80, then we would lose Rs 20.

Loss Formula –

We will subtract the selling price of that article from the cost price of that item to make up for the loss on an item. If there is a loss in an item, its cost price will be higher than its selling price.

Loss = C. P. – S. P.

Selling Price Definition

The amount of money that we sell in an article is the selling price of the article. For example, if we sold an item for Rs 100, its selling price would be Rs 100.

Selling Price Formula –

Formula for extracting the selling price when profit and cost price are given

If in any question we have been given the cost price and profit, then we can find out the selling price of that item. To find the selling price we will add the cost price and profit of that item.

- P. = Profit + C.P.

Formulas for extracting the selling price when cost price and loss are given

If in any question we have been given the cost price and loss of the item, we can still find out the selling price of that item. To find the selling price, we will subtract the loss from the cost price of that item.

- P. = C. P. – Loss

The formula for extracting the selling price when the cost price and profit percentage are given

If we have been given the cost price and profit percentage of an article, then we add the profit percentage to 100 to find out the selling price of that item, now divide the whole by 100 and multiply the cost price and we Sale price will be known.

- P. = 100 + Profit% / 100 × C. P.

The formula for extracting the selling price when the cost price and loss percentage are given

Even if we know the cost price and loss percentage of an item, we can still find out the selling price of that item. To find the selling price, we will subtract the loss percentage from 100 and then divide by 100 and multiply this whole by the cost price.

- P. = 100 – Loss% / 100 × C. P.

Cost Price Definition –

The amount of money that an item is purchased for is called the cost price or purchase price of that item. For example, if we bought an item for Rs 100, then the cost price or purchase price of that item would be Rs 100.

Cost Price Formula –

Formula for extracting the purchase price when the selling price and profit are given

If we know the selling price and profit of an item, then we can easily find out the cost price of that item. We will subtract the profit from the selling price of that item to find the cost price.

- P. = S. P. – Profit

The formula for extracting the cost price when the selling price and loss is given

Even if we know the selling price and loss of an item, we can still extract the cost price of that item. To find the cost price, we will add the loss to the selling price of that item.

- P. = S. P. + Loss

The formula for extracting the purchase price when the selling price and profit percentage are given

If the selling price and profit percentage of an item is given to us, then we can find out the cost price of that item. To find the cost price of the item, we divide 100 by 100 plus profit percentage, and multiply the whole by the selling price.

- P. = 100/100 + Profit% × S. P.

Sugar to extract cost price when sales price and loss percentage are given

If we know the selling price and loss percentage of an item, we will divide the loss by subtracting the loss percentage from 100 to 100 to multiply the cost price of that item and multiply this whole by the selling price.

- P. = 100/100 – Loss% × S. P.

Profit percentage

To find the profit percentage of an article, multiply the profit on that item by 100 and divide it by its cost price. Profit percentage and loss percentage are extracted at cost price only.

Profit% = Profit × 100 / C. P.

Loss percentage

To find the loss percentage of an article, multiply the loss on that item by 100 and divide it by the purchase price.

Loss% = Loss × 100 / C. P.