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Much of money maths uses just your basic operators: addition, subtraction, division and multiplication. But what you do need to know are key concept and what they mean. Let’s have a look at these key concepts:
These are simple money concepts, but they have a big impact on everyday life.
Imagine your local coffee shop sells a cup of coffee for $4.50, and they make a $1.00 profit on each cup. That means it costs them $3.50 to make one coffee, right?
Now, let's say inflation hits, and the cost of everything goes up by 50%. This includes the cost of making a coffee. But the coffee shop keeps selling coffee at the old price of $4.50. Are they still making a profit, or are they now losing money? To keep making the same profit as before, how much would they need to raise their prices?
Let’s do some basic questions now:
Solutions:
Thinking about profit and loss as percentages can be really helpful. Why? Because in business, a larger profit percentage gives you more flexibility. If your costs go up, you have a bigger cushion to absorb the increase.
Remember our coffee shop? They were only making a $0.50 profit on a $4.50 coffee, which is just an 11% profit margin, not 14%. Now, if their costs increase by 50% due to inflation, they'll actually be losing money on every cup of coffee they sell.
Here are a few things you need to know when working with percentages to do with profit and loss:
Let’s do some basic questions:
Solutions
To successfully solve profit and loss problems in a competitive exam, you need to do more than just understand the definitions. While it's important to know that profit equals selling price minus cost price, the real challenge lies in applying these concepts and setting up the correct calculations, especially when problems involve multiple transactions.
You’ll need to be able to modify the formula to get the information you need. Here are some quick tips/formulas to:
Finding SP when CP and Profit % or Loss % are Given:
Finding CP when SP and Profit % or Loss % are Given:
Let’s do some examples:
A shopkeeper buys a shirt for $40 and wants to make a 25% profit. What should be the selling price?
A shopkeeper sells a bag for $90, incurring a loss of 10%. What was the cost price of the bag?
Let’s go through some more difficult questions to step out the logic.
Question 1: Bicycle Resale
A person buys a bicycle for $100. They sell it to a friend at a 10% profit. The friend then sells it to another person at a 10% loss. What is the final selling price?
Question 2: Shopkeeper’s Markup
A shopkeeper marks a product up 50% above the cost price of $30. He then gives a discount of 20% on the marked price. What is his profit or loss percentage?
Question 3: Used Cars
A dealer bought a used car for $5000. He spent $1000 on repairs and then sold it to a customer at a 10% profit. The customer then sold the car at a 5% loss. What price did the customer sell the car at?
The answer is: $6270. Can you work out the steps to get there? (Watch the video for detailed explanations)
The key to working through money math questions quickly is to understand the relationship between the concepts of CP, SP, profit, loss and discount. If you’re familiar with them, you’ll be able to work with them more quickly in an exam situation.
Now, it's your turn to practice.
The questions in this checkpoint are provided to give you an introduction to possible questions you may see in your exam. Don't worry too much as you'll continue to build your skills throughout the course.
Click on the button below and start your practice questions. We recommend doing untimed mode first, and then, when you're ready, do timed mode.
Every question has a suggested solutions videos after you complete the question. This video explains to you the steps to take to answer the question and provides tips and tricks.
Once you're done with the practice questions, move on to the next checkpoint.
Now, let’s get started on your practice questions.
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