Profit and loss related questions in the SBI exams are a pain-point for many aspirants. Especially, the ones belonging to the dishonest trader question type. However tricky it may sound, once you understand the concept, those marks are YOURS!
The following video targets that concept and will help you establish a clear understanding with the help of a solved example.
In this article, we also bring to you
- detailed notes
- some short-cuts
for this topic to help you quickly crack questions on profit and loss. So, read along!
SBI 2018 : Profit & Loss Concepts | Dishonest Trader | Question Type | Video
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SBI 2018 : Profit & Loss Concepts | Basic Definitions | Notes
- Cost Price ( CP): Price at which the seller bought the product.
- Selling Price ( SP): Price at which the seller sells the product to you or the customer.
- Marked Price ( MP): It is the price displayed on the product. ( Also, called MRP )
- Profit ( P): When SP > CP, seller makes a profit.
P = SP – CP ; P% = ( P / CP ) x 100
- Loss ( L ) : When SP < CP, seller suffers a loss.
L = CP – SP ; L% = ( P / CP ) x 100
Remember that both profit and loss are always calculated on the cost price of the product.
- Discounts ( D): The concession given by the seller on the marked price ( MP ) of the product is called a discount.
SBI 2018 : Profit & Loss Concepts | Important Relationships | Notes
All the terms mentioned in the above section are related to each other in very specific ways. The following representation will help you understand these connections and thus resolve all your confusions.
SP = MP – Discount
Markup = MP – CP ; Markup % = [ ( MP – CP ) / CP ] x 100
Remember that discount percentages are always calculated on the Marked Price ( MP ) of the product.
SBI 2018 : Profit & Loss Concepts | Short-cuts for Special Cases | Notes
- For two successive profits or losses on an item, the formula for the resultant profit/loss % is:
x + y + ( xy / 100)
Note: Both ‘x’ and ‘y’, here are profit/loss percentages, as given in the question. For profit use ‘+’ sign and for loss use ‘–’ sign. If the result is in + then, there is an overall profit, if it is in ‘–’ then there is an overall loss.
For more than two successive profits or losses on an item, the above formula for resultant profit/loss % is applied iteratively.
- If two items, which have the same CP, are sold such that one is at a profit of x% whereas the other is at a loss of x%. Then in the entire transaction, the seller neither suffers a loss nor receives profit.
- However, if two items with the same SP, are sold such that one is at a profit of x% whereas the other is at a loss of x%. Then in the entire transaction, the seller suffers a loss, which is given by the following formula:
Overall Loss% = x^2 / 100 [ square of the common profit or loss % divided by 100 ]
All the best!!