Understanding Profit Percentage
Profit percentage is a crucial concept in business, reflecting how much profit a seller makes relative to the cost price (CP) of the item.
Given Data
- Cost Price (CP): 500
- Selling Price (SP): 600
Calculating Profit
To find the profit, you subtract the cost price from the selling price:
- Profit = Selling Price - Cost Price
- Profit = 600 - 500
- Profit = 100
Calculating Profit Percentage
Profit percentage is calculated using the formula:
- Profit Percentage = (Profit / Cost Price) × 100
Now, substituting the values:
- Profit Percentage = (100 / 500) × 100
- Profit Percentage = 0.2 × 100
- Profit Percentage = 20%
Conclusion
The shopkeeper made a profit of 100 on the article, translating to a profit percentage of 20%. This means the shopkeeper earned 20% more than what he spent on the article, indicating a healthy margin for his business.
Understanding this concept is essential for managing finances effectively in any business venture.