For the purpose of comparison, we usually express the actual profits or loss as a percentage of cost price.
For example, a shopkeeper sold an article for Rs.60 which costs Rs.50 and another article sold for Rs.110 which cost Rs.100. In each case, shopkeeper makes a profit of Rs.10. It seems that in both cases profit is equally gained.
But in percentage profit, we have
Percentage Profit = x 100% = 20%
Percentage Profit = x 100% = 10%
Hence, in first case he made a more profit than in 2nd case, this is better and accurate method for comparison.
A bag costing Rs.28 sold for Rs.35. Find percentage profit.
Let Cost Price = Rs.28
Selling Price = Rs.35
Profit = Selling Price – Cost Price = 35 – 28 = Rs.7
Percentage Profit = x 100% = 25%
A machine costing Rs.60 and sold for Rs.50. Find percentage loss.
Let Cost Price = Rs.60
Sold Price = Rs.50
Loss = Cost Price – Sold Price = 60 – 50 = Rs.10
Percentage Loss = x 100% = %