Profit Formula

Profit Formula

The amount of gain realised in a transaction is determined using the Profit Formula. A product makes a profit when its selling price exceeds its cost price. This constitutes the fundamental profit formula, which aids in calculating the proportion of profit made from a business or a financial transaction. In the article published on the Extramarks website and mobile application, students may read more about the Profit Formula.

Students may also download the notes and solutions available for Profit Formula on the Extramarks website and mobile application and use it for offline study and reference.

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What is Profit Formula?

The Profit Formula aids in determining the gain in any financial transaction as well as the profit made by selling a certain product, which is often done in a business. When the selling price exceeds the cost price, a profit may be determined. So, the equation to calculate the profit is: 

Selling price (S.P.) – cost price = profit (C.P.) 

Where, 

The cost at which the item was initially purchased is the cost price. 

The cost at which the thing was sold is its selling price. 

The notes and solutions for the Profit Formula have been compiled by the best subject-matter experts at Extramarks thereby eliminating any chance of inaccuracy in the solutions. These solutions for Profit Formula can also be used to curate personalised notes by students for themselves. The notes on Profit Formula will also help students in revising all crucial concepts well before the examinations. 

Different Profit Formulas

Profit is a phrase that is used for both small and large transactions, since it is general. The fundamental profit calculation presented above is utilised for small-scale transactions. Terms like gross profit and net profit are used in enterprises when larger transactions occur. These words include total sales, revenue, the overall profit margin of a company over time, and others. Below are a few crucial Profit Formula relating to profit: 

• Formula for Profit Percentage: Profit Percentage is equal to 100 divided by the cost price. 
• Gross profit is calculated as revenue (sales) minus the cost of the goods sold. 
• Formula for calculating net profit: net profit = gross profit – costs

The notes based on Profit Formula by Extramarks experts have detailed step by step calculations which will help students in better comprehension of the ideas that the Profit Formula concept contains in itself. The notes based on the Profit Formula are high-quality notes and thus can also be downloaded for offline study and reference. These notes on Profit Formula is a very helpful study tool used by teachers to aid in making students understand better the concepts contained in it.

Profit Percentage Formula

The amount of profit expressed as a percentage is known as profit percentage (%). The formula to calculate the profit percentage is (Profit/Cost Price) 100 because the profit is based on the cost price.

The notes centred on Profit Formula are a very helpful tool from the exam perspective. These notes based on the Profit Formula will help student strengthen their basics about the subject, leading to improved knowledge skills.

Examples Using Profit Formula

Example 1: A store owner paid $25 for a pack of pencils and received $30 in exchange. Make a profit and profit % calculation. 

Solution: 

The pencil bundle cost $25 to produce; its selling price is $30. 

Profit = Selling Price – Cost Price Profit = $30 – $25 = $5 using the profit formula. 

Profit Percentage = (Profit/Cost Price) x 100 according to the Profit Percentage Formula. 

Profit Percentage is equal to (5/25) x 100, or 20%. 

As a result, the sale generated a $5 profit, or a 20% profit margin.

Example 2: A trader earns a profit of $130 after selling a table for $840. Determine the table’s cost pricing. 

Solution: 

The table cost $840 to sell, and the profit was $130. 

Profit = Selling Price – Cost Price – 130 = 840 – Cost Price = $710 according to the profit formula. 

Consequently, $710 is the table’s cost price.

Example 3: Mr. Ben spent $85 on a bag that he later sold for $100. Do you believe he turned a profit on this deal? If so, how much money did he earn? 

Solution: 

The bag cost $85 to make; its selling price is $100. There is profit in the deal because the selling price is higher than the cost price. 

Profit = $100 – $85 = $15 according to the profit formula. 

Mr. Ben thereby earned a $15 profit.