Profit formula tells how much of profit is generated by selling a particular product. Formula of profit is mainly used in business and financial activities. Profit incurred when the selling price of any product sold is more than its cost price (that is, the price at which the product was bought originally). Profit and loss as a percentage should be taken note of because it is a term that often represents how much profit or loss is gained from a particular deal by a trader.

Profit Calculation Formulas

Formula for Profit =

Formula for Profit Percentage =

Gross Profit Formula =

Profit Margin Formula =

Gross Profit Margin Formula =

Notation: S.P. - selling price

C.P.- cost price

Example:

Q1: A shopkeeper buys watches in bulk for Rs. 20 each. He sells them for Rs. 45 each. Calculate the profit and the profit percentage.

Solution:

Given,

Selling price of the watch = Rs. 45

Cost price of the watch = Rs. 20

Now, Profit = Selling Price – Cost Price

So, profit on the watch = 45-20 = Rs. 25

Using the formula for profit percentage,

Profit % = (Profit / C.P.) × 100

Thus, the profit percentage of the shopkeeper will be (25 / 20) × 100 = 1.25 × 100 = 125%.

The shopkeeper can be said to have cleared a profit of Rs. 25 on every watch with the profit percentage of 125%.

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