Profit and Loss

Profit and Loss

Profit is an excess amount of money obtained after selling goods. Profit is obtained if the selling price is greater than the buying price. Thus, to obtain the profit we use the following formula:

Profit = Selling price – Buying price

Loss is the opposite of profit. Loss is obtained when selling price is less than buying price. Therefore, loss is the difference between buying price and selling price. That is:

Loss = Buying price – Selling price

Word Problems on Profit and Loss

Example 1

An orange was bought at 150 shillings and sold at 200 shillings.

1. What was the profit generated?
2. What was the percentage profit?

Solution

1. Find the profit. Profit is the difference between selling price and buying price.

Selling price = sh 200 Buying price = sh 150 Profit = sh 200 − sh 150 = sh 50

Therefore, the generated profit was sh 50.

2. Calculate the percentage profit. Percentage profit is obtained by expressing the profit as a fraction of buying price.

$\frac{50}{150} = \frac{1}{3}$

Multiply a fraction by 100% to obtain the percentage profit. That is,

$\frac{1}{3} \times 100\% = 33.3\%$

Therefore, the profit was 33.3%.

Example 2

Juma bought a pair of shoes at 25,000 shillings and sold it at 16,000 shillings.

1. What loss did Juma get?
2. What was the percentage of the loss?

Solution

1. Find the loss. Loss is the difference between buying price and selling price.

Selling price = sh 16,000 Buying price = sh 25,000 Loss = sh 25,000 − sh 16,000 = sh 9,000

Therefore, Juma got a loss of sh 9,000.

2. Calculate the percentage loss. Percentage loss is obtained by expressing the loss as a fraction of buying price.

$\frac{9,000}{25,000} = \frac{9}{25}$

Multiply the fraction representing the loss by 100%. That is,

$\frac{9}{25} \times 100\% = 36\%$

Therefore, the loss was 36%.

Example 3

Amani bought 40 goats at sh 3,200,000 and sold them at the open market at a loss of 18%.

1. What loss did Amani get in shillings?
2. How much money did he get from the sales?

Solution

1. Calculate the loss amount. To obtain the loss, calculate 18% of 3,200,000 shillings:

$18\% = \frac{18}{100}$

$\frac{18}{100} \times 3,200,000 = 576,000$

Therefore, Amani got a loss of sh 576,000.

2. Determine the sales revenue. The amount of money that Amani got is the difference between buying price and the loss:

sh 3,200,000 − sh 576,000 = sh 2,624,000

Therefore, the amount of money Amani got after the sale was sh 2,624,000.