About Profit Formula
The profit formula is used to determine how much profit was produced in a transaction. A profit is made when the Selling price of a product exceeds its Cost price. This is the fundamental profit formula, which may be used to calculate the percentage of profit made in a firm or when conducting a financial transaction. The profit formula aids in determining the profit earned from the sale of a specific product, often in a business, or the gain in any financial transaction. When the selling price exceeds the cost price, profit can be determined. As a result, the profit formula is:
Profit = Selling Price (S.P.) - Cost Price (C.P.)
Where,
The product's cost price is the price at which it was originally purchased.
The product's Selling Price is the price at which it was sold.
Profit = Selling Price (S.P.) - Cost Price (C.P.)
It's worth noting that when the selling price is less than the cost price, the transaction is considered a loss.
Different Profit Formulas
Profit is a broad phrase that is applied to both small and large transactions. The basic profit calculation presented above is utilised for small-scale transactions. When businesses do larger transactions, terminology like gross profit and net profit are utilised. These words include total sales, revenue, and a company's overall profit % over time, among others. The following are some key profit formulas:
| Name | Formulas |
| Profit Percentage Formula | Profit Percentage = (Profit/Cost Price) × 100 |
| Gross Profit Formula | Gross Profit = Revenue (Sales) - Cost of Goods Sold |
| Net Profit Formula | Net Profit = Gross profit - Expenses |
Profit Percentage Formula
The amount of profit stated in percentages is called profit percentage (%). Because this profit is based on the cost price, the profit percentage is calculated using the formula (Profit/Cost Price) x 100.
Profit = Selling Price -Cost Price
Profit Percentage(%)=
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