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Profit and Loss, Discount

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Profit and Loss, Discount by Total Gadha - Thursday, 5 April 2007, 03:03 AM

Profit and loss calculations are extensions of percentage only with a few twists thrown in because of play of words. In standard MBA exams, approaching these problems in a straight and simplified manner can save you from puzzlement. I will start this chapter by giving two problems on profit and loss:

Problem 1: you have decided to make a donkey out of me. You buy a widget for \$100 and sell it to me for \$200. You buy it back from me for \$300 and then sell it back to me for \$400. Have you made any profit in this process? If yes, how much. Answer: If you said "no profit no loss" or "\$100" you're in for a surprise. Let's see how much you earned in the process and how much spent. Your earnings = \$200 + \$400 = \$600. Your spending = \$100 + \$300 = \$400. Therefore, the amount earned by you = \$600 - \$400 = \$200. Here's the first rule of profit and loss.

Problem 2: Here is an old puzzle: There are two shopkeepers having shops side by side. The first shopkeeper sells bicycles. He sells a bicycle worth \$30 for \$45. One day a customer comes and buys a bicycle. He gives a \$50 note to the shopkeeper. The shopkeeper doesn't have change so he goes to the second shopkeeper, gets the change for \$50, and gives \$5 and the bicycle to the customer. The customer goes away. The next day the second shopkeeper comes and tells the first shopkeeper that the \$50 note is counterfeit and takes his \$50 back. Now, how much does the first shopkeeper lose? Answer: The answer to this tricky problem can be found easily if you consider the first shopkeeper as a system. From the second shopkeeper he took \$50 and gave back \$50 so there was no profit no loss. To the customer he gave \$5 + \$30 bicycle. Therefore, his total loss is \$35, as shown below:

Now, here's the second rule of profit and loss, and it is EXAC TLY similar to the first rule:

Why am I stressing on this rule? Because if you need to pass through the maze of words which present a profit and loss problem, you will have to perform the simple arithmetic of calculating the total amount gained and total amount spent.

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above the selling price. Suppose a shopkeeper buys a product for Rs100 and he wants to earn a profit of 20% on this product. the shopkeeper prices the product at a price which is higher than Rs120. If the customer gives a discount on selling price of Rs120. unless stated otherwise. But a customer wants a discount on the price. Now when the shopkeeper gives discount. his profit will decrease.php?d=111 2/14 .com/mod/forum/discuss. The hiked price. he would like to sell the product at Rs120. the price again falls to Rs120 and the shopkeeper maintains his profit percentage.7/5/13 MBA| CAT| CAT 2011| CAT 2012| CAT Online| MBA 2012| MBA Entrance Exams| CAT Test| Preparation| CAT Questions Now here are some terms associated with profit and loss: NOTE: the profit percentage and the loss percentage are always calculated on C P. See the figure below: totalgadha. on which discount is given is known as the Marked Price . Therefore. There's one more term you should get familiar with in profit and loss. Therefore.

7/5/13 MBA| CAT| CAT 2011| CAT 2012| CAT Online| MBA 2012| MBA Entrance Exams| CAT Test| Preparation| CAT Questions Before we continue with more problems. here is the most important rule to solve profit and loss problems: totalgadha.com/mod/forum/discuss.php?d=111 3/14 .

php?d=111 4/14 . I shall cover some problems based on this in totalgadha.com/mod/forum/discuss.7/5/13 MBA| CAT| CAT 2011| CAT 2012| CAT Online| MBA 2012| MBA Entrance Exams| CAT Test| Preparation| CAT Questions I shall have to end here and leave the rest of it for my CBT Club students.