Absolute Profit and Loss: Formulas, Rules and Examples

Absolute Profit and Loss measures the actual money gained or lost in a transaction. Profit occurs when the selling price is greater than the cost price, while loss occurs when the selling price is lower. This page covers the absolute profit formula, absolute loss formula, calculation rules and numerical examples.

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What Is Absolute Profit and Loss?

Absolute profit or loss is the actual difference between the selling price and the cost price, expressed in currency units. Profit is obtained when SP exceeds CP, and loss is obtained when CP exceeds SP.

Let CP denote cost price and SP denote selling price. If SP > CP, absolute profit = SP − CP. If CP > SP, absolute loss = CP − SP. The amount is written in rupees or another currency, not as a percentage. For CP = ₹800 and SP = ₹950, profit = ₹950 − ₹800 = ₹150.

Absolute Profit and Loss Formula & Tricks

Important Formulas

Absolute profit formula
Absolute Profit = SP − CP, when SP > CP

Subtract the cost price from the selling price when the selling price is higher.

Absolute loss formula
Absolute Loss = CP − SP, when CP > SP

Subtract the selling price from the cost price when the cost price is higher.

Selling price in a profit case
SP = CP + Profit

Add the absolute profit to the cost price to find the selling price.

Selling price in a loss case
SP = CP − Loss

Subtract the absolute loss from the cost price to find the selling price.

Cost price from profit
CP = SP − Profit

Subtract the profit from the selling price to obtain the cost price.

Cost price from loss
CP = SP + Loss

Add the loss to the selling price to obtain the cost price.

Quick Tricks

Compare prices before subtracting

First compare SP and CP. The greater price minus the smaller price gives the absolute amount, but the result is called profit only when SP is greater and loss only when CP is greater.

Example: For CP = ₹1,250 and SP = ₹1,100, CP is greater, so loss = ₹1,250 − ₹1,100 = ₹150.
Use the price-change direction as a sign check

A selling price above the cost price must produce profit. A selling price below the cost price must produce loss. This check prevents reversing the subtraction order.

Example: If CP = ₹640 and profit = ₹90, SP must be ₹640 + ₹90 = ₹730, not ₹550.

Absolute Profit and Loss Concepts

Absolute Profit

Absolute profit is the money gained when the selling price is greater than the cost price.

The formula is Profit = SP − CP. It gives the actual gain in currency units. If an article is bought for ₹2,400 and sold for ₹2,750, the profit is ₹2,750 − ₹2,400 = ₹350.

Example: CP = ₹2,400, SP = ₹2,750; absolute profit = ₹350.

Absolute Loss

Absolute loss is the money lost when the cost price is greater than the selling price.

The formula is Loss = CP − SP. It gives the actual reduction in money received compared with the purchase cost. If an article costs ₹1,800 and is sold for ₹1,575, the loss is ₹1,800 − ₹1,575 = ₹225.

Example: CP = ₹1,800, SP = ₹1,575; absolute loss = ₹225.

Finding an Unknown Price

An unknown cost price or selling price can be found by rearranging the profit or loss equation.

For profit, SP = CP + Profit and CP = SP − Profit. For loss, SP = CP − Loss and CP = SP + Loss. The operation depends on whether the transaction has a gain or a loss.

Example: If SP = ₹1,260 and profit = ₹180, CP = ₹1,260 − ₹180 = ₹1,080.

Profit, Loss and No-Gain Cases

The relation between SP and CP determines whether the transaction has profit, loss or no gain and no loss.

SP > CP indicates profit, SP < CP indicates loss, and SP = CP indicates neither profit nor loss. In the no-gain, no-loss case, the absolute amount is zero.

Example: For CP = ₹950 and SP = ₹950, profit = ₹0 and loss = ₹0.

Absolute Profit and Loss Video Lessons

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CP, SP, Profit and Loss Formulas

Understand the fundamental formulas for Cost Price, Selling Price, profit and loss, including their relationships and basic calculations for quantitative aptitude.

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Practice Absolute Profit and Loss Questions

Practise published questions related to this topic.

1A store offers a 10% festival discount on the marked price of ₹900. Later, to clear the stock, it offers an additional 5% off on the already discounted price. What is the total amount paid by the customer?→ 2A shopkeeper marks the price of a washing machine 40% above its cost price. He offers a 25% discount on the marked price to attract customers. If the final selling price of the washing machine is ₹21,000, what was its cost price?→ 3Startup buys a table at ₹5,000 , spends ₹2,000 refurbishing it, and sells it for ₹9,000 . Find profit or loss %.→ 4A sofa set marked at Rs. 78,000 is sold at Rs. 65,000. What is the percentage of discount?→ 5If the marked price of an article is ₹7,875 and the discount offered is 4.4%, then the selling price (in ₹) is:→ 6Find the single equivalent discount (rounded off to two decimal places) for successive discounts of 23%, 11%, and 29%.→ 7An article is sold for Rs. 420 after giving 30 percent discount on the marked price. Had the discount, not been given, then there would have been a profit of 50 percent. What is the cost price of the article?→ 8By selling an article for ₹117 , a man loses 40% . At what price (in ₹ ) should he sell the same article to gain 40% ?→ 9A person bought goods for ₹400 and sold them at a 20% loss. What was the selling price?→ 10The marked price of a shirt is ₹1,260. Rohan purchased it at ₹920. Find the discount rate. (Rounded off to 2 decimal places.)→

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Quick Revision Notes

Absolute Profit and Loss Revision Points

Use these rules to calculate the actual gain or loss amount.

  • Profit occurs when SP > CP.
  • Loss occurs when CP > SP.
  • Absolute profit = SP − CP.
  • Absolute loss = CP − SP.
  • For profit, SP = CP + Profit.
  • For loss, SP = CP − Loss.
  • If SP = CP, there is no profit and no loss.
  • Absolute profit or loss is expressed in currency units, while profit or loss percentage is expressed as a percentage.

Absolute Profit and Loss FAQs

What is the absolute profit formula?

Absolute profit = SP − CP, when SP is greater than CP. For CP = ₹500 and SP = ₹575, absolute profit is ₹75.

What is the absolute loss formula?

Absolute loss = CP − SP, when CP is greater than SP. For CP = ₹900 and SP = ₹840, absolute loss is ₹60.

What is the difference between absolute profit and profit percentage?

Absolute profit is the actual money gained, calculated as SP − CP. Profit percentage is calculated as (Profit ÷ CP) × 100.

How do you find the selling price when the cost price and loss are given?

Use SP = CP − Loss. If CP = ₹1,500 and loss = ₹125, then SP = ₹1,375.

How do you find the cost price when the selling price and loss are given?

Use CP = SP + Loss. If SP = ₹2,200 and loss = ₹300, then CP = ₹2,500.

Can absolute profit or loss be zero?

Yes. When SP equals CP, the absolute profit and absolute loss are both zero, giving a no-profit, no-loss transaction.

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