On many occasions profit or loss are expressed as percentages. Like fractions, percentages are always of certain values.
Here we will learn about various terms that are related to profit, loss and other terms related to business.
$\underline{Total\ Cost\ Price}:$
The total price the merchant pays to buy or obtain any item. This includes the amount paid by the merchant to the person or company from whom he buys the item, any transportation cost, taxes which is paid by the merchant.
$\underline{Marked\ Price}:$
The price which the merchant marks on an item, at which he intends to sell the item.
$\underline{Discount}:$
Discount, often expressed as a percent, is the amount the seller is willing to reduce from the marked price when actually selling the item. Discount is expressed as a percent of the marked price.
$\underline{Actual\ Selling\ Price}:$
The actual price which the customer pays the merchant for buying that item. Where there is a discount, this price is calculated by subtracting the discount amount from the marked price.
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$\underline{Profit/Loss\ percent}:$
When expressed as a percentage, it indicates a percent of the total cost price. When indicated as a negative number, it shows a loss.
II. Example
Let us take an example of a business transaction to understand this better.
A merchant buys a $100$ jackets at a price of $Rs\ 1500$ each. He uses a courier to transport these jackets to his shop. The courier charges him $Rs\ 10000$.
Here the total cost price of each jacket $= Rs\ 1500 + the\ transportation\ cost\ per\ jacket$.
Total transportation cost for 100 jackets $= Rs\ 10000$.
Transportation cost for each jacket $= Rs\ 10000 \div 100 = Rs\ 100$
$\texttip{\therefore}{therefore}$ Total cost price per jacket $= Rs\ 1500 + Rs\ 100 = Rs\ 1600$
The merchant intends to make a profit of $Rs 400$ per jacket. So he marks the price at $Rs\ 1600 + Rs\ 400 = Rs\ 2000$
Due to a slow market, he decides to give a discount of $10\%$ on these jackets.
Actual selling price $= 2000 - 10\%\ of \ 2000$
$= 2000 - 200 = 1800$
$\texttip{\therefore}{therefore}$ The profit per jacket is $Actual\ selling\ price - Total\ cost\ price = 1800 - 1600 = 200$
The profit, when expressed as a percentage will be