Three Types of GMAT Profit and Loss Problems

You will encounter the following three types of Profit/Loss problems in the GMAT:

Profit/loss as percentage of Cost Price

In this case you will be given the cost price and sales price, and will be asked to simply calculate the profit/loss incurred by the seller by entering into the given transaction. This will be done by dividing the difference between the Sales Price and the Cost Price by the Cost Price. To convert the decimal into a percentage, you will multiply it by 100.

Profit Percentage = ((Sales Price - Cost Price)/Cost Price) x 100

Selling price = Z x (Cost price)

Where Z is any positive number. When Z < 1 we have a loss. When Z = 1 we have neither profit nor loss. When Z > 1 we have a profit.

Profit or Loss % = (Z - 1) x 100.

Selling price = [(Y / 100) + 1]x (Cost price)

Where Y is the profit or loss percentage. When Y < 0 we have a loss. When Y = 0 we have neither profit nor loss. When Y > 0 we have a profit.

Profit/loss as percentage of Sales Price

Sometimes the problem will be worded differently and will require the test taker to calculate Profit Percentage for Seller, given the Sales Price and the Profit as a percentage of the Sales Price. In this case, user will first calculate the Cost Price based upon Sales Price and Sales Profit Percentage, and then calculate the Profit Percentage for the seller.

  Cost Price = (Sales Price) - (Sales Profit% x Sales Price)/100

Profit/loss as percentage as percentage of Marked Price

Another flavor of profit/loss questions that you will see on the exam will ask you to calculate Profit/loss based upon the marked price and may also ask you to take any discounts into consideration.

Let’s assume that Marked price (M) is known. Cost Price (C) is known. The profit percentage at the Marked Price is also given. The problem may ask you to calculate the discount applied to the transaction.

Before going into the formula understand the pricing chain:

Cost Price (from supplier) -> Marked Price (from retailer)-> Sales Price (from retailer; after discount)

Since (Discount = Marked Price – Sales Price), we need to determine the Sales Price to compute Discount.
Discount = Marked Price - Sales Price
              = Marked Price - ((Sales Profit % x Sales Price)/100 - (Cost Price))

Discount % = (Marked Price – Sales Price) / Marked Price

Note: The Sales Profit% is the Profit Margin

Contributions from: Luis R. Villegas H

Author : 

Grockit, an online test prep game, is the smartest way to study for your test. It's adaptive, fun and finds the right teacher for you. Grockit’s analytic capabilities and adaptive technology identifies students' strengths and weaknesses, focusing the student's study time.  Students can practice in adaptive solo games, play social learning games with peers, and work with experts that match their specific needs.

Essential GMAT Reading Comprehension Guide

After you read F1GMAT’s Essential GMAT Reading Comprehension Guide, you will:

1. Complete GMAT RC Questions in less than 1 minute and 50 seconds

2. Read Faster

3. Take Notes Effectively

4. Collect and Interpret Facts

5. Speed up Summary Creation

6. Remember Information

7. Question the Author   

8. Learn to answer GMAT Reading Comprehension Title question   

9. Learn to Solve GMAT Reading Comprehension Main Idea Question   

10.Learn to Solve GMAT Reading comprehension inference question   

11. Learn to Solve GMAT Reading Comprehension Detail Questions   

12. Learn to Organize passage in GMAT Reading Comprehension   

13. Learn to Identify style/tone or attitude of the author

14. Learn to Improve GMAT Reading Comprehension Score

Download Essential GMAT Reading Comprehension Guide

Mastering GMAT Critical Reasoning

After you read F1GMAT’s Mastering GMAT Critical Reasoning Guide, you will:

1) Learn to eliminate out of scope answer choices

2) Learn to spot logical fallacies

3) Learn to read questions by focusing on the holy trinity – premise, assumption, and conclusion.

4) Learn to disregard filler information

5) Complete GMAT CR Questions in less than 1 minute and 40 seconds

Download Mastering GMAT Critical Reasoning

Navigate F1GMAT

F1GMAT Services (MBA Applicants) 

MBA Research

MBA Salary(Latest Salary Data)
MBA Admission Interview Tips



MBA Application Essays

GMAT Tutorials (Free)

GMAT Question Bank

Top MBA Programs

Get F1GMAT's Newsletters (Best in the Industry)
Included in the Newsletter:

  • Ranking Analysis
  • Post-MBA Salary Trends
  • Post-MBA Job Function & Industry Analysis
  • Post-MBA City Review
  • MBA Application Essay Tips
  • School Specific Essay Tips
  • GMAT Preparation Tips
  • MBA Admission Interview Tips
  • School Specific Interview Tips
  • Funding Guidance and
  • Special Consultation Service (only for Subscribers)

Subscribe to F1GMAT's Newsletter