Unit-06; Ratio Analysis & Business Reasoning

Gross Profit Ratio

The Gross Profit Ratio (also known as Gross Margin Ratio) is a financial metric used to assess
a company’s financial health and efficiency in producing and selling goods. It measures the
percentage of revenue that exceeds the cost of goods sold (COGS).

Formula:

Gross Profit Ratio=(Gross ProfitNet Sales)×100\text{Gross Profit Ratio} = \left( \frac{\

text{Gross Profit}}{\text{Net Sales}} \right) \times
100Gross Profit Ratio=(Net SalesGross Profit)×100

Where:

 Gross Profit = Net Sales − Cost of Goods Sold (COGS)

 Net Sales = Total Sales − Sales Returns, Discounts, and Allowances

Example:

If a company has:

 Net Sales = $500,000

 COGS = $300,000

Then:

 Gross Profit = $500,000 − $300,000 = $200,000

 Gross Profit Ratio = (200,000 / 500,000) × 100 = 40%

Interpretation:

 A higher ratio indicates the company is retaining more revenue after covering direct
production costs, which is generally good.
 A lower ratio may indicate issues with pricing, production efficiency, or high input
costs.

Let me know if you'd like help calculating this with your own numbers or comparing it across
companies or industries.
 Operation ratio
The Operating Ratio is a financial metric used to assess a company’s operational efficiency. It
shows the proportion of net sales that is consumed by operating expenses and cost of goods sold
(COGS).

Formula:

Operating Ratio=(Operating Expenses+COGSNet Sales)×100\text{Operating Ratio} = \left( \

frac{\text{Operating Expenses} + \text{COGS}}{\text{Net Sales}} \right) \times
100Operating Ratio=(Net SalesOperating Expenses+COGS)×100

Where:

 Operating Expenses include administrative, selling, and distribution expenses (but not
interest or taxes).
 COGS is the cost of goods sold.
 Net Sales = Gross Sales − Sales Returns and Allowances

Example:

If a company has:

 Net Sales = $1,000,000

 COGS = $600,000
 Operating Expenses = $250,000

Then:

Operating Ratio=(600,000+250,0001,000,000)×100=85\%

Interpretation:

 A lower operating ratio (generally below 80%) indicates higher efficiency and
profitability.
 A higher operating ratio means a larger portion of sales is being eaten up by operational
costs, leaving less for profit.
 Operating Profit Ratio
The Operating Profit Ratio (also called Operating Margin Ratio) measures the percentage of
revenue that remains after covering operating expenses. It indicates how efficiently a company
is managing its core operations.

Formula:

Operating Profit Ratio=(Operating ProfitNet Sales)×100\text{Operating Profit Ratio} = \left( \

frac{\text{Operating Profit}}{\text{Net Sales}} \right) \times
100Operating Profit Ratio=(Net SalesOperating Profit)×100

Where:

 Operating Profit = Net Sales − (COGS + Operating Expenses)

Or:
Operating Profit = Gross Profit − Operating Expenses
 Net Sales = Total Sales − Sales Returns and Discounts

Example:

If a company has:

 Net Sales = $500,000

 COGS = $300,000
 Operating Expenses = $120,000

Then:

 Gross Profit = $500,000 − $300,000 = $200,000

 Operating Profit = $200,000 − $120,000 = $80,000
 Operating Profit Ratio = (80,000 / 500,000) × 100 = 16%

Interpretation:

 A higher ratio indicates the company is effectively controlling its operating costs and is
more profitable.
 A lower ratio suggests inefficiencies or high operating expenses.
 Net profit Ratio
The Net Profit Ratio (or Net Profit Margin) measures the percentage of net profit earned from
net sales. It reflects a company’s overall profitability after accounting for all expenses, including
operating costs, interest, and taxes.

Formula:

Net Profit Ratio=(Net ProfitNet Sales)×100\text{Net Profit Ratio} = \left( \frac{\text{Net

Profit}}{\text{Net Sales}} \right) \times 100Net Profit Ratio=(Net SalesNet Profit)×100

Where:

 Net Profit = Operating Profit − Non-operating Expenses + Non-operating Income −

Taxes
 Net Sales = Gross Sales − Sales Returns and Discounts

Example:

If a company has:

 Net Sales = $1,000,000

 Net Profit (after all expenses) = $120,000

Then:

\text{Net Profit Ratio} = \left( \frac{120,000}{1,000,000} \right) \times 100 = \textbf{12%}

Interpretation:

 A higher net profit ratio means better overall profitability.

 A lower ratio may signal high expenses, inefficiencies, or pricing issues.
Inventory turnover ratio
he Inventory Turnover Ratio measures how efficiently a company manages its inventory by
showing how many times inventory is sold and replaced during a period (usually a year).

Formula:

Inventory Turnover Ratio= Cost of Goods Sold(COGS) / Average Inventory

Average Inventory = Opening Inventory + Closing Inventory / 2

Example:

If:

 COGS = $600,000
 Opening Inventory = $80,000
 Closing Inventory = $100,000

Then:

 Average Inventory = (80,000 + 100,000) / 2 = $90,000

 Inventory Turnover Ratio = 600,000 / 90,000 = 6.67 times

Interpretation:

 A higher ratio means inventory is sold quickly, indicating efficient inventory

management.
 A lower ratio suggests slow-moving inventory, overstocking, or obsolescence issues.
 Business reasoning
Business reasoning refers to the logical thinking and analysis used to make informed decisions in a
business context. It involves evaluating data, understanding cause-and-effect relationships, and
considering both short-term and long-term impacts.

1. Percentage
Problem
I Convert the following fractions into percentage
1 7
(i) (ii) (iii) 0.6 (iv) 5.578
10 18

Solution
1
(i) X100 = 10%
10

7
(ii) x100 = 38.8%
18

(iii 0.6
x100 = 60%
)

iv) 5.578 x 100 = 55%

Problem- What is the number whose

(i) 20% is 16 (ii) 6% is 76

Q 5. a. A student writes 0.05 in place of 0.5 what is the percentage error?

b. What percent is ⅛ of 625?
Solution:
Difference
X 100
(a) Error Percent = Original Number
 0.5 – 0.05 0.45
= 0.5 = 0.5

0.45
X 100
Error % = 0.5 = 90 or error = 90%

1
(b) X% of 625 = 8

x 1
625 X 100= 8

1 X 100 1 1
x= 8 X 625 = 50 = 0.02% or 0.02% of 625 = 8

Q 6.The sales of food decreased from Rs. 4,230 to Rs. 3,384 during a period of 3 years. What is the
percentage of decrease?

Solution:

Difference = Rs. 4230 – Rs. 3384 = Rs. 846

Decreasing in Rs. 4,230 = Rs. 846

846
¸ Decreasing in 1 = 4230

Decreasing in 100 = = 20%

846 X 100
Percentage of Decrease = 20%
4230
Q 7. Ram and Shyam got 53% and 66% marks respectively in an examination. If the difference of their
marks is 65. Find the maximum marks (MM) in the examination

Solution:

Let, Maximum Marks is 100

Ram Got = 53 marks

Shyam Got = 66 marks

Difference of both = 66-53 = 13

When, Difference is 13 , then Maximum Marks = 100

100 X 65
¸ Difference is 65 , then Maximum Marks = = 500
13

Q 8. In an examination a candidate gets 48% of the total marks and gets 24 marks more than pass
marks. Another candidate gets 36% marks and gets 12 marks less than pass marks. Obtain the pass
marks.

Solution:

Let, Total Mark = x

and, Minimum Pass Mark = y

According to question,
x X 48 12x
First Candidate get marks = =100 25

When are 24 marks more than pass marks

12x
¸ - 24 = y
25

Or, 12x – 25y = 600 ……………….(1)

x X 36 9x
100 25
Second Candidate get marks = =

When are 12 marks Less than Pass marks

9x
¸ + 12 = y
25

Or, 9x – 25y = –300 ……………….(2)

Subtracting equation (2) from (1)

3x = 900

x = 300

Put value of x in equation (1)

12 X 300 – 25y = 600

25y = 3600 – 600 = 3000

3000
y= 25 = 120

Pass Marks = 120.

Q 9. 40 students of a class study either Mathematics or Statistics or both. 30% students take both
subjects and 42½ study only Statistics. How many students study Mathematics? How many percent
study only Mathematics?

Solution:

Total students = 40

Number of Students those who read both the subjects.

40 X 30
100
 = = 12

40 X 85 X 1
Number of Students who read only Statistics = 2 X 100 = 17

¸ Number of Students who read Mathematics = 40 – 17 = 23

Number of Students who read only Mathematics = 23 – 12 = 11

11 X 100
¸ Percentage of students who read only Mathematics = 40

55
= 2 % = 27½%

Q 10. In an examination 60% student passed in Housekeeping and 50% passed in Front office and 25%
failed in both the subjects. If 140 students passed in both, find the number of students who appeared in
the examination.

Solution:

Let, Total Students = 100

Failed in Book-keeping = 40

Failed in Mathematics = 50

Failed in Both = 25

Failed only in Book-keeping = 40 – 25 = 15

Failed only in Mathematics = 50 – 25 = 25

Total Failed = 25 + 15 + 25 = 65

Total Passed = 35

Passed Students are 35 then Total Student = 100

 100
Passed Students is 1 then Total Student = 35

100 X 140
¸ Passed Students are 140 then Total Student = 35

= 400 Students

Q 11. In an examination 75% students passed in Housekeeping, 70% passed inFront office and 23%
failed in both the subjects. If 136 students passed in both the subjects, calculate the number of
candidates, who appeared in the examination.

Solution:

Let, Total Students = 100

Passed in Accountancy = 75

Passed in Statistics = 70

Failed in both subjects = 23

So, Failed in Accountancy = 100 – 75 = 25

Failed in Statistics = 100 – 70 = 30

Failed only in Accountancy = 25 – 23 = 2

Failed only in Statistics = 30 – 23 = 7

Total Failed = 23 + 2 + 7 = 32

Total Passed = 100 – 32 = 68

Passed students are 68 then Total Students = 100

100
68
 Passed students is 1 then Total Students =

100 X 136
¸ Passed Students are 136 then Total Student = 68

= 200 Students

Q 12. In an examination 30% students failed in English and 35% failed in Mathematics. If 27% failed in
both the subjects English and Mathematics, find the percentage of those who passed both the subjects.

Solution: Let, Total Students = 100

Failed in English = 30

Failed in Mathematics = 35

Failed in both = 27

Failed only in English = 30 – 27 = 3

Failed only in Mathematics = 35 – 27 = 8

Total Failed = 27 + 3 + 8 = 38

¸ Percentage of those who passed in both the subjects

= 100 – 38 = 62%

Q 13. A businessman donates 3% of his income and spends 90% of his income on his family. If a
balance of Rs. 1,750 is with him, find out his income.

Solution:

Let, Income of Businessman is Rs. 100

Balance, after donating 3% and spending 90% on his family

 = 100 – 3 – 90 = 7

Balance is Rs. 7, then Income = Rs. 100

100
¸ Balance is Rs. 1, then Income = Rs. 7

100 X 1750
¸ Balance is Rs. 1750, then Income = 7 = Rs. 25,000.

Q 15. A man spends 80% of the income and saves the rest. Due to an increase in cost of living his
expenditure increases by 37½% and the increase in his income in 16 %. What percent of his income is
saved by him now?

Solution:

Let, his Income = Rs. 100

Saving = 100 – 80 = Rs. 20

Expenditure = Rs. 80

% increase in Income

2
16
Now, Income = 100 + ( 3 % of 100)

50
= 100 + 3

350
= Rs. 3

1
37 %
2 increase in Expenditure

1
37 %
Now Expenditure = 80 + ( 2 of 80)
 75 80
= 80 + 2 100

80 + 30 = Rs. 110

350 110 20
 Saving = 3  1 = 3

20
3 100
350
 Saving Percentage = 3

20 3
= 3 X 350 X 100

40
= 7 %

Q 16. How much should a man reduce the use of petrol whose price has increased by 10% so that he
may have to spend no extra money?

Solution:

Price of Petrol increased 10%

Hence, quantity of petrol whose price was Rs. 100, now Price is Rs. 110

 That man should reduce Rs. 10

Similarly,

 Reduce in the expenditure of Rs. 110 = Rs. 10

10
 Reduce in the expenditure of Rs. 1 = 110

10 100 100 1
9
 Reduce in the expenditure of Rs. 100 = 110 = 11 = 11
 1
9
Hence, that man should reduce 11 % in the use of Petrol.

2. PROFIT AND LOSS

Problem-1

Solution:
Cost price = Rs.120
Selling Price = Rs. 138
Profit = Rs.138 – 12 = Rs. 18
18 x 100
Profit Percentage = 15%
120

Problem-2

If 25 articles are bought for Rs. 125 and sold at Rs. 6 per article, what is the profit percentage at cost
price and sale price?

Solution:
Cost Price of 25 Articles = Rs. 125
125
Cost Price per Article = = Rs. 5
25
Selling Price of 1 Article = Rs. 6
Profit = Selling Price – Cost Price
= Rs. 6 – 5 = Re. 1
Profit x 100 1 x 100
Profit Percentage = = = 20
Cost Price 5

Profit x 100 1 x 100

Profit Percentage = = = 16⅔
Selling Price 6

Problem-3
A bought an article for rs. 10,120 and sold it for Rs. 11,080. B bought an article for Rs. 9,900 and sold it
for Rs. 11,000. Who earned more profit? Whose profit percentage is more?
Solution:
Profit of A = 11,080 – 10,120 = Rs. 960
Profit of B = 11,000 – 9,900 = Rs. 1,100
B got Rs. 1,100 – 960 = Rs. 140 More profit
960 x 100
Profit percentage of A = = 9.49%
10,120
1,100 x 100
Profit percentage of B = = 11.11%
9,900
Profit percent of B is also more.

Problem-4

If the selling price of 10 articles is equal to purchasing price of 11 articles. Calculate the gain percent.

Solution

Let, Cost price of 11 articles is Re. 1

1
Cost Price of 1 article = Rs.
11
Selling Price of 10 articles = Re. 1
1
Selling Price of 1 article = Rs.
10
1 1 11 – 10 1
Profit (on 1 article) = - = =
10 11 110 110

1
110
And, Profit Percent = X 100
1
11
11
= x 100 = 10% (on Cost Price)
110
10 x 100 100
Profit Percent = = = 91/11% (on Selling Price)
110 11

Problem 6

Ram buys a motor car for Rs. 52,000 and sells it for Rs. 57,800. Find his profit percentage?
Solution
Cost Price of motor car = Rs. 52,000
 Selling Price of motor car = Rs. 57,800
Profit = Selling Price – Cost Price
= Rs. 57,800 – 52,000 = Rs. 5,800
5,800 x 100
Profit Percentage = 52,000 = 11.15%

Problem 7
A dealer bought 100 articles for Rs. 102 and sold for Rs. 200. Find the profit percent on the sale price.
Solution
Cost Price = Rs. 102
Selling Price = Rs. 200
Profit = Rs. 200 – 102 = Rs. 98
Profit x 100
Profit Percentage on the Sale Price =
Selling Price
98 x 100
= 49 or 49%
200

Problem 8
4 percent more is gained by selling profit a table for Rs. 180 than by selling for Rs. 175. Find the cost
price of the table.
Solution
Let, Cost Price = Rs. x
Profit = 180 – x (on selling for Rs. 180)
(180 – x) x 100
Profit Percent =
x
Profit = 175 – x (on selling for Rs. 175)
(175 – x) X 100
Profit Percent =
x
According to question,
(180 –x) x 100 (175 – x) X 100
- =4
x x
4Xx
Or, 180 – x – (175 – x) =
100
4Xx
5=
100
100 X 5
X= = Rs. 125
4
Problem 9
An article is sold for rs. 150 at a gain. Had it been sold for Rs. 135, there would have been a loss equal to
50% of the original gain. Find the cost price of the article.
Solution
Let, Profit is Rs. x
Cost Price = Rs. 150 – x
x
On Selling for Loss Rs.
2
x
Cost price = Rs. 135 +
2
From equation (1) and (2)
x = Profit = Rs. 10
Cost Price = Rs. 140
Problem 10 -By selling an article for Rs. 120 the seller gains one-third of
its cost price. What is the cost price and gain percent?
Solution
Let, Cost Price of an article = Rs. X
1 x
Profit = of x = Rs.
3 3
x
and, Selling Price = x+ = 120
3
3x + x
or, = 120 (given)
3
4x = 120 x 3
120 x 3
x = Rs. 90
4
Profit = 1/3 of 90 = Rs. 30
30 x 100
Profit Percent = 90 = 33 1/3%

Problem 11
A person sells a machine for Rs. 4,000 and loses something. Had
he sold it for Rs. 5,000 his gain would have been 2/3 of the
former loss, find the cost price of the machine.
Solution
Let, Cost Price of machine is Rs. x
Loss on Selling for rs. 4,000 = x – 4,000
And, Profit on Selling for rs. 5,000 = 5,000 – x
According to question,
(5,000 – x) = 2 (x – 4,000)
 3
8,000
x + 2/3x = 5,000 +
3
5x 15,000 + 8,000 23,000
= =
3 3 3
23,000
x= Rs. 4,600
5

Problem 12
A businessman sells an article for Rs. 720 earns for rs. 720 earns a profit to 20% (i) Find the cost price, (ii)
Find the profit percentage at the selling price.
Solution
Selling Price is Rs. 120, then Cost Price = Rs. 100
100
Selling Price is Re. 1, then Cost Price = Rs.
120
100 x 720
Selling Price is Rs. 720, then Cost Price = Rs. 600
120
120 x 100 50
Profit Percent on Selling Price = = = 16 2/3 %
720 3

Problem 13
A seller by selling 10 books for rs. 15 earns a profit equal to the purchase price of the book. Find the
percentage profit and also calculate purchase price per book.
Solution
Let, Purchase Price of 10 books = Rs. x
Profit = Purchase Price = Rs. x
Selling Price = x + x = 2x
2x = 15
X = Rs. 7.50
7.50
Purchase Price of One book = = Re. 0.75
10
Profit
Profit Percent = x 100
Purchase Price
x
= X 100 = 100%
Problem 14
Suresh sells a cow to Ramesh at a profit of 10% and Ramesh sells it to Prakash at a loss of 5%. What did
Prakash pay for the cow if Suresh paid Rs. 2,250 ?
Solution
Purchase Price of cow for suresh = Rs. 2.250
2.250 x 10
Profit (10% rate) = = Rs. 225
100
Purchase Price of cow for Ramesh = 2.250 + 225 = Rs. 2,475
2,475 x 5
Loss (5% rate) = = Rs. 123.75
100
Purchase Price of cow for Prakash = Rs. 2,475 – 123.75
= Rs. 2,351.25
Q 18. A businessman sells two horses at Rs. 1,955 each. On selling of the
first horse he earns a profit of 15% whereas on selling the second
horse he suffers a loss of 15%. Find out the percentage profit or loss
on the whole.

Solution: Articles selling price for manufacturer = Rs. 25 then, profit = 25%
100 25
Cost price of manufacturer = 125 = Rs. 20
Selling Price for Dealer = Rs. 35
and, Purchase Price = Rs. 25
 Profit = Rs. 10
10 100
then Profit Percentage = 25 = 40%
2
Q 19. A person sold a horse for Rs. 120 more than its cost and made a profit equal to 7 of its cost.
Find the cost of the horse.
Solution:
Let, cost of the horse = Rs x
 Selling Price = Rs. (x + 120)
Profit = (x + 120) – x = Rs. 120
2
7 of Purchase or Cost Price = Profit
2
7 of x = 120
120 7
x= 2 = Rs. 420
or, cost of the horse = Rs. 420

Q 20. An oil Mil sells 100 tins of oil at the rate of Rs. 8 per litre and it
suffers a loss of Rs. 600. It makes a profit of Rs. 900. If the oil is sold at
the rate of Rs. 9 per litre. Find out the quantity of oil per tin and
its cost of production Solution:
Let, Quantity of oil per tin = x litre
 Quantity of oil in 100 tin = 100x litre
 Selling Price = 100x x 8 = Rs. 800x
But, Loss of mil on this selling price is Rs. 600
 Cost Price = 800x + 600 …………… (1)
Now, selling price at the rate of Rs. 9 per litre = Rs. 900x
 and profit on it = Rs. 900
 Cost Price = 900x – 900 …………… (2)
From equation (1) and (2), Cost Price should be equal
800x + 600 = 900x – 900
x = 15 Litre
Cost of Production of 100 tins = 800 x 15 + 600 = 12,600
Cost per tin = Rs. 126

Q 21. A fruit-seller purchased some oranges at the rate of two oranges for Rs. 1.36 and the same
number of oranges at the rate of three oranges for Rs. 1.35. He sold them at the rate of 5 oranges for
Rs. 2.70 bearing a loss of Rs. 1.50. How many oranges did he purchase?
Solution:
1.36
First time, Purchase Price of one orange = 2 = Rs. 0.68
1.35
Second time, Purchase Price of one orange = 3 = Rs. 0.45
 Purchase Price of two oranges = 0.68 + 0.45 = Rs. 1.13
Selling Price of five oranges = Rs. 2.70
2.70
 Selling Price of one orange = Rs. 5 = Rs. 0.54
 Selling Price of two oranges = 2 x 0.54 = Rs. 1.08
Loss = 1.13 – 1.08 = Rs. 0.05
 When loss is Rs. 0.05 then Number of orange = 2
2
1.5
 Loss is Rs. 1.50 then Number of orange = 0.05
= 60 Nos.

Q 22. Suresh sells a cow to Ramesh at a profit of 10% and Ramesh sells it to Prakash at a loss of 5%.
What did Prakash pay for the cow if Suresh paid Rs. 2,250?
Solution:
Purchase Price of cow for Suresh = Rs. 2,250
2250 10
Profit (10% rate) = 100 = Rs. 225
Purchase Price of cow for Ramesh = 2250 + 225 = Rs. 2475
2475 5
Loss (5% rate) = 100 = Rs. 123.75
 Purchase Price of cow for Prakash = Rs. 2475 – 123.75
= Rs. 2351.25

Q 23. Mohan sells a book to Sohan at 10% gain. Sohan sells the same book to Ram at 10% loss. If Ram
purchase that book for Rs. 21.78. Find the original purchase price of the book.
Solution:
 Book’s purchase price for Ram = Rs. 21.78
Book’s selling price for Sohan = Rs. 21.78
Loss of Sohan = 10%
Similarly, If Selling Price is Rs. 90 then Purchase Price = Rs. 100
100 21.78
 If Selling Price is Rs. 21.78 then Purchase Price = 90
= Rs. 24.2
Or, Purchase Price for Sohan = Rs. 24.2
 Selling price for Mohan = Rs. 24.2
When Selling Price is Rs. 110, then Purchase Price = Rs. 100
100 24.2
 Selling Price is Rs. 24.2, then Purchase Price = 110
= Rs. 22

Q 24. If an article is sold at Rs. 24, there is a profit of Rs. 4. If it is sold at a loss of 10%. Find out its
selling price?
Solution:
Selling Price = Rs. 24, Profit = Rs. 4
Purchase Price = 24 – 4 = Rs. 20
 10 
1 
 Selling Price on 10% Loss = 20  100 
 1  10  1 
1   
= 20  10  = 20  10 
20 9
= 10
= Rs. 18

Q 25.Kumari Maya purchased two cows for Rs. 1,300. She sold one cow
at a profit of 20% and another cow at a loss of 12%. If the sale prices
of both the cows are same. Find the purchase price of each cow.
Solution:
Let, Purchase Price of first cow = Rs. x
 Purchase Price of 2nd cow = Rs. 1300 – x
 20   120x 
1   
Selling Price of 1st cow = x  100  =  100 
 12 
1 
Selling Price of 2nd cow = (1300 – x)  100 
(1300  x) 88
= 100
 Both Selling Price are equal
 120x (1300  x) 88
 100 = 100
120x = 114400 – 88x
120x + 88x = 114400
114400
 x = 200 = 550
Or, Purchase Price of 1st cow = Rs. 550
Purchase Price of 2nd cow = 1300 – 550 = Rs. 750

Q 27. If an article is sold at Rs. 23, there is a loss of Rs. 7. If it is sold at a profit of 20%. Find out its
selling price.
Solution:
Selling Price = Rs. 23
Loss = Rs. 7
Purchase Price = Rs. 23 + 7 = Rs. 30
30 20
20% Profit = 100 = Rs. 6
Selling Price = 30 + 6 = Rs. 36

1
25
Q 28. A dealer sells a horse for Rs. 1000 and losses 3 %. What is the gain or loss percent if
he sells the horse for Rs. 1,200?
Solution:
Selling Price = Rs. 1000
1 76
25
Loss Percent = 3%= 3 %
 76 
 100  
When selling price is Rs.  3  then purchase price = Rs. 100
100 3
When selling price is Rs. 1, then purchase price = 224
100 3 1000
 When selling price is Rs. 1000 , then purchase price = 224
= Rs. 1339.29
 Loss on selling in Rs. 1200
= Rs. 1339.29 – 1200 = Rs. 139.29
139.29 100
Loss Percent = 1339.29
= 10.4%

Q 29. A trader sells two horses for Rs. 990 each. On this deal he gain 10% on the first horse and
losses 10% on the other. Find the percent of total fain or loss.
Solution:
Selling Price 100
Purchase Price of 1 horse = 100  Profit Percent
st

990 100 990 100

= 100  10 = 110 = Rs. 900
Selling Price 100
Purchase Price of 2nd horse = 100  Loss Percent
990 100 99000
= 100  10 = 90 = Rs. 1100
Purchase Price of both horses = 900 + 1100 = Rs. 2000
Selling Price of both horses = 990 + 990 = Rs. 1980
Loss = Rs. 2000 – Rs. 1980 = Rs. 20
20 100
Loss Percent = 2000 = 1
Total Loss = 1%

Q 30. A businessman purchase wheat for Rs. 600. He sells halt of it at a loss of 10% and the remaining
half at a profit of 20%. Show the percentage of profit or loss on the whole.
Solution:
Purchase Price of wheat = Rs. 600
Half of Purchase Price = Rs. 300
 10 
1 
Selling Price with 10% Loss on Rs. 300 = 300  100  = Rs. 270
 20 
1 
Selling Price with 20% Profit on Rs. 300 = 300  100  = Rs. 360
Total Selling Price = Rs. 270 + 360 = Rs. 630
Profit = Rs. 630 – 600 = Rs. 30
30 100
Profit Percent = 600 = 5%

Q 31. A dealer uses an incorrect balance of weight and cheats in buying and selling each by 10%.
What percent profit does he earn by such cheating?
Solution:
Let, he purchase goods of Rs. 100 is 10% Less = Rs. 90
He sales it in 100 + 10 = Rs. 110
Profit = 110 – 90 = Rs. 20
20 100 2
22
Profit Percentage = 90 = 3%

Q 32. Manoj cheats 20% each time by using family weights in purchase and sale of goods. Find
how much percent he earns by this way?
Solution:
Let, price of 100Kgs. Goods is Rs. 100
In Purchase, he cheats of 20% = he takes 120Kgs. In place of 100Kgs.
Actual Purchase Price = Rs. 100
In sale, he cheats of 20% = he gives 80Kgs. In place of 100Kgs.
i.e. He sales 80Kgs goods in Rs. 100
100 120
 He sales 120Kgs goods = 80 = Rs. 150
Profit = Actual Sales Price – Actual Purchase Price
= 150 – 100 = Rs. 50
= 50% Profit.
Q 33. A publisher fixed the price of his books at 50% above cost price and allow 20% trade
discount and a further discount of 5% for cash payment. Find his gain percent.
Solution:
Let, Cost Price = Rs. 100
Fixed Price = 100 + 50 = Rs. 150
150 20
Trade discount @20% = 100 = Rs. 30
Balance Amount = Rs. 150 – 30 = Rs. 120
120 5
Further discount @ 5% = 100 = Rs. 6
 Balance Amount = Rs. 120 – 6 = Rs. 114
Total Profit = Rs. 114 – 100 = Rs. 14
Profit Percent = 14%

Q 34. A publisher marks the price of the books at 50% above the cost price and allow 15%
trade discount and a further discount of 4% for cash payment. Find the percentage of his profit.

Solution:
Let, Price of book is Rs. 100
List Price = 100 + 50% of 100
= Rs. 150
Less : 15% trade discount
150 15
100 = Rs. 22.50 = Rs. 127.50
Less : 4% further discount
127.50 4
100 = Rs. 5.10 = Rs. 122.40
 Profit = Rs. 122.40 – 100 = Rs. 22.40
or, Profit Percent = 22.4%

Q 35. Mohan purchased an old scooter for Rs. 4,630. He wants to earn a profit of 30% after
giving 12.5 commissions. Calculate the sale price.
Solution:
4630 30
Profit = 100 = Rs. 1,389
Profit + Purchase Price = Rs. 4630 + 1389 = Rs. 6019
 Pure Price is Rs. 87.5 , the Sale Price = Rs. 100
[  Pay 12.5 commissions ]
100 6019
 Price is Rs. 6019 , the Sale Price = 87.5
= Rs. 6879 approx

Q 36. The cost price of an article is Rs. 35. What price should be marked on it so that the profit
is 10% after allowing a discount of 12½% ?

Solution:
Purchase Price = Rs. 35
35 10
Sale Price for 10% Profit = 35 + 100 = Rs. 38.5
Now, 100 – 12½ = 100 – 12.5 = Rs. 87.5
When net selling price is Rs. 87.5 , then Fixed Price = Rs. 100
100 38.5
 when net selling price is 38.5 , then Fixed Price = 87.5
= Rs. 44

Q 38. The marked price of a table is Rs. 300. In case of cash payment the profit is 25% after a discount
of 20%. Find the cost price.
Solution:
Selling Price = Rs. 3000
300 20
Discount @20% = 100 = Rs. 60
Balance Amount = Rs. 300 – 60 = Rs. 240
When Selling Price is Rs. 125 , then Purchase Price = Rs. 100
100 240
When Selling Price is Rs. 240 , then Purchase Price = 125
= Rs. 192

Q 39. A commodity costs Rs. 125. At what price should it to be sold so that a profit of 14% may be
earned after allowing 5% discount?
Solution:
Cost Price = Rs. 125
125 14
Pure Selling Price for 14% Profit = 125 + 100
= 125 + 17.5 = Rs. 142.5
Discount is 5%
Hence, 100 – 5 = Rs. 95
 Fixed Price for Rs. 95 = Rs. 100
100 142.50
 Fixed Price for Rs. 142.50 = 95 = Rs. 150
Q 40. A dealer sale two cycles at a price Rs. 1232 each. He earns a profit 12% on first cycle and
suffers a loss of 12% on the other. What is the profit or loss on the whole and at what percent?
Solution: Selling Price of 1st Cycle = Rs. 1232
Profit = 12%
Sale Price × 100
 Purchase Price of 1st Cycle = 100 + Profit Percent
1232 100 1232 100
= 100  12 = 112 = Rs. 1,100
Selling Price of 2nd Cycle = Rs. 1282
Loss = 12%
Sale Price × 100
 Purchase Price of 2 Cycle = 100 - Loss Percent
nd

1232 100 1232 100

= 100  12 = 88 = Rs. 1400
Purchase Price of both cycles = Rs. 1100 + 1400 = Rs. 2500
Sale Price of both cycles = 1232 + 1232 = Rs. 2464
Loss on both cycles = 2500 – 2464 = Rs. 36
36 100
Loss Percent = 2500 = 1.44
Loss = 1.44%

Q 41. A trader sells two horses for Rs. 3910 each. On this deal, he gain 15% on the first horse
and loses 15% on the other. Find the total gain or loss?
Solution:
Sale Price × 100
Purchase Price of 1st horse = 100 + Profit Percent
3910 100 391000
= 100  15 = 115 = Rs. 3,400
Sale Price × 100
Purchase Price of 2nd horse = 100 - Loss Percent
3910 100 391000
= 100  15 = 85 = Rs. 4,600
Total Purchase Price = 3400 + 4600 = Rs. 8000
Total Selling Price = 3910 + 3910 = Rs. 7820
Loss = 8000 – 7820 = Rs. 180
180 100 18 9
Loss Percent = 8000 = 8 = 4 = 2.25
Loss = 2.25%

3. DISCOUNT
Q. 1 A dealer allows to his customers 10% trade discount and 10% cash discount. What will be
the net payment if the face value of an article is Rs. 100.
Solution:
Net Payment = Face value – (Trade discount + cash discount)
 10   10 
100  1    1 
=  100   100 
90 90
100  
= 100 100 = Rs. 81

Q. 2 A trader purchased a ratio for Rs. 1,050. He wants to earn a profit of 30% after allowing
12.5% discount. Calculate the price to be fixed by him.
Solution:
Let, Cost Price = Rs. 100
Sales Price = 100 + 30 = Rs. 130
 Cost Price is Rs. 100, then sales price = Rs. 130
130
 Cost Price is Rs. 1, then sales price = 100
130 1050
 Cost Price is Rs. 1050, then sales price = 100 = Rs. 1365
Let, Fixed Price = Rs. 100
Sales Price = 100 – 12.5 = Rs. 87.5
 Sales Price is Rs. 87.5, then Fixed Price = Rs. 100
100
 Sales Price is Rs. 1, then Fixed Price = 87.5
100
1365
 Sales Price is Rs. 1365, then Fixed Price = 87.5
= Rs. 1560

Q. 3 A scooter costing Rs. 18,000 is sold for Rs. 17,800. Find the purchase rate of discount.
Solution:
Trade Discount = Rs. 18000 – 17800 = Rs. 200
D 100
Percentage rate of Discount (R) = A
100 200
= 18000 = 1.1111

Rate of Discount = 1.11%

Q. 4 A T.V. dealer sold a T.V. set for Rs. 10,090, the selling price of which was Rs. 11,450. Find
the rate of trade discount.
Solution:
Trade Discount = Rs. 11450 – 10090 = Rs. 1360
 D 100
Percentage Rate of Discount (R) = A
1360 100 136000
= 11450 = 11450 = 11.878
Rate of Discount = 11.878%

Q. 5 A publisher allow 25% discount and 2% cash discount to the booksellers. If he gets an order for
Rs. 5000. Find out the net price to be paid by the bookseller.
Solution:
Amount of order = Rs. 5000
5000 25
Trade discount = 100 = Rs. 1250
Balance = Rs. 5000 – 1250 = Rs. 3750
3750 2
Cash Discount = 100 = Rs. 75
Net Price = Rs. 3750 – 75 = Rs. 3675.

Q. 6 Uttam purchase radio at the rate of Rs. 1050. He wants to earn profit 30% after allowing 12½%
rebate. Find out the printed price of the radio.
Solution:
Let, the Cost Price = Rs. 100
then, Sale Price = 100 + 30 = Rs. 130
 Cost Price is Rs. 100, then sales price = Rs. 130
130
 Cost Price is Rs. 1, then sales price = 100
130 1050
 Cost Price is Rs. 1050, then sales price = 100
= Rs. 1365
Let, Fixed Price = Rs. 100
Sale Price = 100 – 12.5 =87.5
 Sales Price is Rs. 87.5, then Fixed Price = Rs. 100
100
 Sales Price is Rs. 1, then Fixed Price = 87.5
100
1365
 Sales Price is Rs. 1365, then Fixed Price = 87.5
= Rs. 1560

4.COMMISSION AND BROKERAGE

Q. 1 An agent receives a commission of 4% from buyer and 6% from the seller. What is his
commission if the goods worth Rs. 6000 were sold through him? What amount the buyer will give?
What amount the seller get?
Solution:
 6000 4
Commission received form buyer = 100 = Rs. 240

6000 6
Commission received form seller = 100 = Rs. 360
Total commission of agent = 240 + 360 = Rs. 600
Amount paid by buyer = 6000 + 240 = Rs. 6240
Amount received by seller = 6000 – 360 = Rs. 5640

Q. 2 The monthly sales of an agent are Rs. 25,000. In the end of the year he sends Rs. 2,60,250. to
his principal. Find the percentage rate of commission.
Solution:
Monthly Sales = Rs. 25,000
Annually Sales = 12 x 25000
= Rs. 3,00,000
Amount send to Principal = Rs. 2,60,250
 Commission = 13.25
Commission = 13.25%

Q. 3 How many bottles of hair oil, a salesman need to sell at Rs. 9.55 each to earn a commission
worth Rs. 95.50 at the rate of commission 5%.
Solution:
Commission 100
Amount of Sales = Rate
95.50 100
= 5 = Rs. 1910
Amount of Sales
 No. of Bottles = Cost of One Bottle
1910
= 9.55
= 200

Q. 4 An agent changes 5% commission on each transaction. He settled a transaction at Rs.

25,000 and immediately sold it at a loss of 15%. Calculate how much did the agent earn on the said
transaction?
Solution:
25000 5
Brokerage on Rs. 25,000 = 100 = Rs. 1250
 15 
25000  1  
Sale Price =  100 
85
25000 
= 100 = Rs. 21,250
 21250 5
Brokerage on this Price = 100 = Rs. 1062.50
Total Brokerage = 1250 + 1062.50
= Rs. 2310.50

Q. 5 A salesman gets a fixed salary plus certain percentage commission based on the sales. If
he gets a total remuneration of Rs. 1130 and Rs. 1360 on the consecutive sales in two months
amounting to Rs. 17,100 and Rs. 21,700. Calculate the rate of his commission and monthly
salary.
Solution:
Difference of sales of two months = Rs. 21,700 – 17,100
= Rs. 4600
Difference of labour of two months = Rs. 1360 – 1130 = Rs. 230
230 100
 Commission on Rs. 100 = 4600 = Rs. 5
Or, Rate of Commission = 5%
17100 5
Monthly Salary = 1130 - 100
= Rs. 1130 – 855
= Rs. 275.

Q. 6 An agent gets 3% commission on the full sale and 1½% bonus on the amount of the sale
exceeding Rs. 20,000. He sold goods amounting to Rs. 35,000. Calculate his commission, bonus and
full remuneration.

Solution:
3% commission on full sale.
 Commission = 3% of Rs. 35,000
3 35000
= 100 = Rs. 1050
Bonus = 1½% of (35000 – 20000)
3 15000

= 2 100 = Rs. 225
Full Remuneration = Rs. 1050 + 225
= Rs. 1275

Q. 7 Hari is appointed as a salesman on a monthly salary of Rs. 500. If the turnover exceeds Rs.
4000 per month, he will get a commission of 5% alongwith the salary. If he gets Rs. 725 in all in a
month. Calculate the turnover for the month.
Solution:
Total monthly income = Rs. 725
and monthly salary = Rs. 500
Hence, commission = Rs. 725 – 500 = Rs. 225.
 Commission 100
Monthly sales more than Rs. 4000 = Rate
225 100
= 100 = 4500
Hence Total sales = Rs. 4000 + 4500 = Rs. 8500.

Q. 8 A salesman gets a salary of Rs. 250 every month and 2% commission on sales or he is given 6%
as total commission on sales. If he gets an equal income in both the cases in the whole year,
what is the value of the sales?

Solution:
Let, value of the total sale is Rs. x
 Salary per month and amount received at 2% commission
2x 2x
12 250 
= 100 = 3000 + 100
6x
And amount received at 6% commission = 100
According to question:
2x 6x
3000 + 100 = 100
6x 2x
Or 100 - 100 = 3000
 4x = 3000 X 100
x = 75000.
Value of total sale is Rs. 75000.

Q. 9 Find the rate of brokerage, if a broker gets Rs. 350 as brokerage on a transaction of Rs.
10,000.
Solution:
Brokerage on Rs. 10000 = Rs. 350
350
100
 “ “ “ 100 = 10000 = 3.5%

Q. 10 On the sale of Rs. 30,000 earned the salesman a commission of Rs. 2600. His commission
was 10% on cash sales and 5% on credit sales. How much was his cash sales.
Solution:
Total commission of seller = Rs. 2600
Let, cash sale was Rs. x.
Hence, credit sale = Rs. (30000 – x)
x 10 10 x
Commission on cash sale = 100 = 100
(30000  x ) 5
Commission on credit sale = 100
150000  5 x 5x
= 100 = 1500 – 100
Total commission =
10 x 5x
100 + 1500 – 100 = 2600
5x
100 + 1500 = 2600
5x
100 = 2600 – 1500
1100 100
x= 5
= Rs. 22000.

Q. 11 An agent is entitled to monthly salary of Rs 500, a commission on monthly sales @5% and
certain bonus on the sales exceeding Rs. 15,000. The sales for a particular month amount to Rs.
30,000, and he get Rs. 2300 in all. Find the amount and percentage rate of bonus.
Solution:
Monthly Income = Rs. 500
Monthly Sales = Rs. 30,000
30000 5
Hence, monthly commission = 100 = Rs. 1500
Sales more than Rs. 15000 = 30000 – 15000 = Rs. 15000
Bonus = 2300 – (500 + 1500) = Rs. 300
Bonus 100
Hence, Rate of Bonus = Sale
300 100
= 15000
= 2%
Q. 12 Mohan purchase an old car. He can sell it at 10% profit. An agent can sell it at 15% profit
but will change his brokerage at 3%. If Mohan gets Rs. 124 more through the agent, what is the
purchase percent of car?
Solution:
Suppose, Mohan purchase car in Rs. 100
He can sale in Rs. 110 but a broker can sale in Rs. 115, but he takes brokerage 3%
Then,
15 3
3% on 115 = 100 = 3.45
115 – 3.45 = 111.55
Additional profit = 111.55 – 110 = 1.55
 1.55 Ad profit then purchase price = Rs. 100
100
124
 124 Ad profit then purchase price = Rs. 1.55
= Rs. 8000