# How to solve profit and loss problems

Profit and loss problems have long been a part of the study course whether it be mathematics or any aptitude tests. It’s a bit tricky too. Here are some shortcuts to solve profit and loss problems.

Profit and loss problems are essentially devided into two categories

1. Profit and loss problems including percentages

2. Profit and loss problems not including percentages

For those problems  including percentages the main shortcut is to use the multiplying factor method.The general rule for such problems is given by

## CP * MF = SP

where CP = Cost Price, MF = multiplier factor, SP = Selling Price.

Now for all Profit and loss problems  involving percentage the above formula can be used.

Now inorder to find the multiplying factor the method is simple:

The multiplying factor actually depends on whether the problem is a profit or a loss problem.

If it is a profit the MF is obtained by actually adding the ( profit% / 100 ) with 1. For example if the profit% is 20%, then the MF is 1+(20/100)=1+0.2=1.2.

Similarly if the problem is one involving a loss. then the MF is obtained by actually subtracting the ( loss% / 100 ) from 1. For example if the loss% is 20%, then the MF is 1-(20/100) = 1-0.2 = 0.8.

Now once you have the MF, then multiply it with CP to get SP.

You can also use the following formulas to find the profit and loss percentage.

### CP

Well that’s all about problems involving percentages in profit and loss.

### Profit and loss problems not containing percentages

For simple

profit and loss problems not containing any percentages, the most fundamental equation is used

## CP – SP = Loss

Now the one and only point to be noted is that the above formulas are applied assuming that the no of goods baught = no of goods sold. Then only the formula has its proper applications.