Tuesday, 4 April 2017

How to Solve Profit and Loss Problems Using Proportionality for IBPS PO Exam


Solving Profit and Loss Problems can be quite a challenge in IBPS PO Exam. So here is a concept that will simplify this complex topic for you.

Profit and Loss Problems
  
If Profit and Loss Problems scare you, or you just skip problems on Profit and Loss by merely reading the question in exams, then this smart method is for you! It is not a good idea to use the Profit and Loss Formula to solve questions in IBPS PO Exams since it is time taking and involves a lot of calculations. 

This is 4th Smart Method in the series of blog posts about tricks that will help you solve questions in 5- 10 seconds that would otherwise take 30- 45 seconds.
Problems on Profit and Loss

What is Profit and Loss?

The price at which an article is purchased by the seller is called its cost price (CP).
The price at which an article is sold is called its Selling Price (SP).
Profit or Gain: The difference between SP and C.P (if SP is greater than CP)
Loss: The difference between CP and SP (if CP is greater than SP)

Now, this is a list that we all know by heart since childhood and have sworn by it while solving all profit and loss problems.


List of Formulas used for  Solving Profit and Loss Problems


Example of a Profit and Loss Problem


Sameer sold an article Rs 460 and earned a profit of 15%. At what price should it have been sold so as to earn a profit of 20%?
1) Rs 465    2) Rs 480    3) Rs 498    4) Rs 485    5) None of these


Solving Profit and Loss Problems Using the Conventional Method



Your first reaction on reading any question to solve in Profit and Loss is going to be to look at the list of Profit and Loss formula and find the formula which has the solution to the above problem. After you have identified correct one, which is actually the fifth formula in this case, you will grab a pen and paper and substitute the values to get the following-
Step 1:
Initial SP= 460, Initial Profit= 15%
Step 2:
CP= (100x 460)/ (100+ 15)
Step 3:
CP= (100x 460)/ 115= 400
Step 4:
Desired Profit= 20%
Step 5:
Required SP= (100+ 20)x 400/ 100
Step 6:
 (120x 400)/100= 480
No doubt that the Profit and Loss Formula took you to the correct answer but , this is just too many calculations and so many steps to reach the answer in 45- 60 seconds. No wonder you don’t look forward to solving problems in Profit and Loss.
And that big list of Profit and Loss Formula is surely not easy to remember!

Solving Profit and Loss Problems without the Profit and Loss Formula


Is the above method recommended? No.. Never..
Time to dump this almost ancient method! Adopt a smart method to solve profit and loss problems by using proportionality.
We know that Initial Profit= 15%, Desired Profit= 20%
Step 1:
Initial Selling Price= 115%= 460 and Desired Selling Price= 120%?
Using Proportionality we get:
Step 2:
115:120 :: 460:x
On cross multiplication we get Desired Selling Price:
Step 3:
 (120 x 460)/ 115= 480 which is our answer
Two simple steps and you get the answer in 5 seconds, no formulae, no calculation just the simple idea that an equation of proportionality is written in the form a:b :: c:d when the two ratios are equal and then solved by cross multiplication. 


Profit and Loss Problems


No more struggling with formulae and big calculations. Use this smart method to solve more such questions:

Question 1: Arjun sold an article Rs 1200 and earned a profit of 25%. At what price should it have been sold so as to earn a profit of 30%?
1) Rs 1356      2) Rs 1428      3) Rs 1248      4) Rs 1225      5) None of these

Question 2: Smita sold an article Rs 230 and earned a profit of 15%. At what price should it have been sold so as to earn a profit of 20%?
1) Rs 240      2) Rs 244      3) Rs 200      4) Rs 220      5) None of these 

Leave your answers in the comments below and do tell us how long you took to solve these questions.


Stay tuned for more smart method.
Problems on Profit and Loss




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