Profit & Loss
One of the most important topics for any MBA entrance exam is Profit, Loss, and Discount. We have been studying this topic since our school. The base of this topic is Percentage and Ratio, if you have mastered the basic concepts, Profit and Loss becomes easy. Every exam has a significant number of questions on this topic.
CAT :
CAT has significantly increased the number of Arithmetic questions from topics like Percentage and Ratio, Time and Work, and Profit and Loss in the last few years. A total of 4-5 questions are set on these topics. Out of these, questions on Profit and Loss in CAT ranges from 1 to 2. The questions are tricky and usually demands a good hold on concepts.
Year | No of | Good | Difficulty | |
2019 | Slot 1 | 2 | 1 | Difficult |
Slot 2 | 2 | 2 | Moderate | |
2018 | Slot 1 | 1 | 1 | Moderate |
Slot 2 | 0 | 0 | – | |
XAT :
Profit & Loss questions in XAT mostly ranges from 1 to 3; these questions are generally difficult and are often the game changer if attempted.
Year | No of | Good | Difficulty |
2019 | 1 | 0 | Difficult |
2018 | 2 | 1 | Moderate |
SNAP :
Profit & Loss questions in SNAP ranges from 3 to 5. They are easy to moderate and can be easily attempted.
Year | No of | Good | Difficulty |
2019 | 5 | 3 | Moderate |
2018 | 4 | 3 | Easy |
List of concepts
There are some set concepts or types on which questions are framed. A thorough understanding of each type of problem would help in tackling the exam. Profit & Loss question in CAT, XAT, SNAP, NMAT, etc. are of the following type:
- Direct Formula based: Straight formula-application based question
- Single Product – Different CP based: Questions based on buying a similar product at two different prices and selling them after clubbing at some other price
- Equal Profit and Loss percentage – Same SP: Questions on selling two products at the same price but one at a loss of x% and the other at a gain of x%. The overall transaction will always lead to a loss
- Consumption – Expenditure based: Effect of increase or decrease in expenditure on the quantity of the product consumed
- Successive Profit/ Loss: Questions on successive selling and purchasing of a product at different profit or loss percentages. For example, when there is a profit of x% and then a loss of z% on selling an item, the net profit or loss percentage = (x+z+(xz/100))
- Faulty Weights: This concept includes questions on the use of faulty weights by a shopkeeper or a wholesaler who uses those weights to measure the quantity
- Marked price and Discount: Simple questions on discounts and MP of a product
- Ratios: One of the finest applications of Ratios and its concept is in Profit and Loss questions. These questions test the student’s fast calculation skills
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CAT Previous Year Profit and Loss Questions
Question 1: On selling a pen at 5% loss and a book at 15% gain, Karim gains Rs. 7. If he sells the pen at 5% gain and the book at 10% gain, he gains Rs. 13. What is the cost price of the book in Rupees? [CAT-2019]
Let the CP of pen = p and that of book = b
So as per question: 0.15 b – 0.05 p = 7 or 15b – 5p = 700 ————-1)
Similarly 10b + 5p = 1300 –—–2)
Adding both equations: 25b = 2000 or b = 2000/25 = 80
Question 2: A shopkeeper sells two tables, each procured at cost price p, to Amal and Asim at a profit of 20% and a loss of 20%, respectively. Amal sells his table to Bimal at a profit of 30%, while Asim sells his table to Barun at a loss of 30%. If the amounts paid by Bimal and Barun are x and y, respectively, then (x −y)/p equals – 1. 1.2 2. 1 3. 0.50 4. 0.7 [CAT-2019]
Let Cost price each table = p
For Amal: Cost price = p + 20% of p = 6p/5
Selling price = 6p/5 + 30% of 6p/5 = 7.8p/5= 1.56p
For Asim: Cost price = p – 20% of p = 0.8p
Selling price = 0.8 p – 30% of 0.8p = 0.56p x-y/p = 1.56p-0.56p/p = 1
Question 3: Mukesh purchased 10 bicycles in 2017, all at the same price. He sold six of these at a profit of 25% and the remaining four at a loss of 25%. If he made a total profit of Rs. 2000, then his purchase price of a bicycle, in Rupees, was 1. 2000 2. 6000 3. 4000 4. 8000 [CAT-2019]
Let the price of each bicycles = p ,
Total CP = 10p
SP of 6 bicycles = 6p +25% of 6p = 7.5 p
SP of 4 bicycles = 4p – 25% of 4p = 4p – p = 3p
Thus total SP = 7.5p + 3p = 10.5 p
Profit = 10.5p – 10p = 0.5p
Given, 0.5p = 2000
Hence, p = 4000
Question 4: A wholesaler bought walnuts and peanuts, the price of walnut per kg being thrice that of peanut per kg. He then sold 8 kg of peanuts at a profit of 10% and 16 kg of walnuts at a profit of 20% to a shopkeeper. However, the shopkeeper lost 5 kg of walnuts and 3 kg of peanuts in transit. He then mixed the remaining nuts and sold the mixture at Rs. 166 per kg, thus making an overall profit of 25%. At what price, in Rs. per kg, did the wholesaler buy the walnuts? [CAT-2018]
Let the cost price of peanuts for the wholesaler be x per kg
Cost price of walnuts for the wholesaler is 3x per kg.
The wholesaler sold 8 kg of peanuts at 10% profit and 16 kg of walnuts at 20% profit to a shopkeeper. Total cost price to the shopkeeper = (8)(x)(1.1) + 16(3x)(1.2) = 66.4x
The shopkeeper lost 5 kg walnuts and 3 kg peanuts.
The shopkeeper sold the mixture of 11 kg walnuts and 5 kg peanuts.
His total selling price=166(16) = 2656
His total cost price = 2656*(100/25) = 2124.8
66.4x = 2124.8
x = 32
Price at which the wholesaler bought walnuts = 3x = 96/- per kg
How to Prepare
Preparing any topic from the scratch requires patience, hard work, and above all commitment. To prepare for Profit and Loss, here are some Level-wise preparatory guidelines to follow:
Level – 1
- Learn Speed calculation: For an effective and quick calculation, be thorough with tables till 20, memorize squares till 30, and cubes till 15
- Fraction – Percentage relation: For quick percentage calculation, memorize the fraction-percentage table. For example, 1/2 is 50%, 1/3 is 33.33%, and so on. It will help analyze discount, profit per cent, etc
- Note down all the formulas in this chapter and keep revising them
- Practice beginner level questions on Mark-up and Discounts, Faulty weights, Expenditure – Consumption, and Successive Discounts
- Questions on Faulty weights are a bit tricky, hence need more emphasis
- Move on to more complex problems, attempt beginner and intermediate level mock on concepts of Profit and Loss
- Solve previous year CAT questions on Profit & Loss and time yourself. Do not get stuck on one question and try to solve easy questions first
- Keep attempting mocks to check your performance
- Topic-wise mocks, provided by MBAP, can be utilized to enhance your performance
- For advanced level preparation, start practising questions from Arun Sharma
- Questions in Arun Sharma are categorized into Level of Difficulty (LOD), based upon your preparation level, start attempting 3 or 4 questions daily
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