Profit & Loss (SQA National 5 Applications of Mathematics): Revision Note

Profit & loss

What is profit & loss?

• A profit is made when an item is sold for a higher price than it was bought for

  • e.g. a painting bought for £12,000 and sold for £15,000 makes a profit

• A loss is made when an item is sold for a lower price than it was bought for

  • e.g. a house bought for £120,000 and sold for £110,000 makes a loss

How do I calculate the profit or loss?

• Calculate the difference between the total revenue and the total cost

  • It is a profit if the total revenue is higher

  • It is a loss if the total cost is higher

How do I find the percentage profit or loss?

• STEP 1
  Calculate the actual profit or loss

  • e.g. Joe buys a game for £20 and sells it for £17

    • The total cost is £20

    • The total revenue is £17

    • The loss is £20 - £17 = £3

• STEP 2
  Write the actual profit or loss as a fraction over the total cost

  • 

• STEP 3
  Convert the fraction into a percentage

  • 

  • 15% loss

How do I find the income needed to reach a percentage profit?

• You might be given a desired profit and asked to calculate the selling price to achieve this

• You simply need to increase the buying price by the percentage profit