Profit and Loss Questions Explained
Profit and loss questions appear in numerical reasoning tests, especially for finance and business roles. They test your ability to work with cost price, selling price, and margins. Here's how to master them.
Basic Formulas
Profit = Selling Price (SP) − Cost Price (CP). Loss = CP − SP (when SP < CP). Profit % = (Profit ÷ CP) × 100. Loss % = (Loss ÷ CP) × 100. Always identify which values you have and which you need before calculating.
Finding Selling Price or Cost Price
If CP = £100 and profit = 20%, then SP = CP × (1 + profit%/100) = 100 × 1.2 = £120. If SP = £90 and loss = 10%, then CP = SP ÷ (1 − loss%/100) = 90 ÷ 0.9 = £100.
Discount and Marked Price
Marked Price (MP) is the price before discount. Selling Price = MP × (1 − discount%/100). Example: MP = £80, 25% discount → SP = 80 × 0.75 = £60. To find discount %: (MP − SP) ÷ MP × 100.
Successive Discounts
Two discounts of 10% and 20% are not 30% total. Apply sequentially: first 10% off, then 20% off the reduced price. Or use: effective discount = 1 − (1 − 0.10) × (1 − 0.20) = 1 − 0.72 = 28%.
Practice Profit and Loss
Build fluency with numerical reasoning practice including the numerical reasoning test, abstract reasoning, and Watson Glaser.
Frequently Asked Questions
What's the difference between profit % on cost vs on selling price?
Profit % on cost = (Profit ÷ CP) × 100. Profit % on SP = (Profit ÷ SP) × 100. Read the question carefully—they give different results.
How do I handle "sold at a loss of X%"?
Loss % = (Loss ÷ CP) × 100. So Loss = CP × (loss%/100). SP = CP − Loss = CP × (1 − loss%/100).
Are profit and loss questions common in all sectors?
More common in finance, retail, and business roles. Still useful to practice—they reinforce percentage and ratio skills.