Profit and Loss Calculations PDF
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This document provides examples of calculating profit, loss, discounts, and VAT. It details how to calculate profit percentage, discount amounts, and VAT additions to a price. Examples of hire purchase arrangements are also included.
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Profit and Loss The cost price plus the profit gives the selling price. The cost price minus the loss gives the selling price. Profit and loss are expressed as percentages of the cost price. Example: If I buy an umbrella for $20 and sell it later for $25, the profit is $5. The profit percentage is 5...
Profit and Loss The cost price plus the profit gives the selling price. The cost price minus the loss gives the selling price. Profit and loss are expressed as percentages of the cost price. Example: If I buy an umbrella for $20 and sell it later for $25, the profit is $5. The profit percentage is 5/20 = 25% (Formula for profit/ loss percentage: profit or loss divided by cost, then you multiply by 100%) Discount Shops sometimes offer a discount; this is a percentage that they take off the price, for example in a sale. Example: Oliver sees some shoes on sale. They normally cost $70 but there is a 20% discount. The discount is 20% of $70. 20/100 x 70 = 14 So the shoes cost $70 - $14 = $56 VAT Many islands charge VAT (Value Added Tax), sales task or consumption tax of around 15% on goods. This is added on to the price that you pay for goods in the shop. Example: An item that costs $28 with 15% vat will be 15/100 x 28 = 4.20 $28 + $4.20 = $32.20 | The item actually costs $32.20. Hire Purchase Sometimes you buy goods on hire purchase. This means paying some money to start with, called a deposit, followed by a number of monthly installments. This usually costs more than buying it outright. Example: Peter wanted to buy a motorbike for $900. He paid a deposit of $160 followed by 24 monthly installments of $35. He paid $160 + ($35 x 24) = $1,000 So he paid an extra $100, or 100/900 = 11.1%