GMAT Profit & Loss Practice Questions with Solution

Ready to take the GMAT and level up your business school dreams? Here’s the deal: Understanding profit and Loss isn’t just about crunching numbers, it’s about sharpening your skills and making smarter decisions under pressure.

Right from calculating profit margins to figuring out discounts, every problem is an opportunity to flex your brain muscles.

We get it, preparing for the GMAT can feel too much at times. But don't worry, you're not alone in this! Let’s get you prepared with the right tools, tips, and strategies. When you break down complex problems into bite-sized pieces and practice consistently, those tricky Profit and Loss questions will no longer seem intimidating.

Understanding the Profit and Loss Concept for GMAT

Profit and Loss is crucial for solving related GMAT questions. Below is a table summarising the essential concepts and formulas.

Yocket Prep has a focused, structured approach to GMAT preparation, helping you improve your skills with expert guidance, live and recorded sessions to achieve your target score.

GMAT Profit and Loss Question Types

Profit and Loss questions in the GMAT Quantitative section test your ability to apply basic mathematical principles to real-world scenarios. These questions often integrate multiple layers of calculations involving percentages, ratios, and successive transactions. By recognising the types of problems that commonly appear, you can strategise your approach to answer them quickly and accurately. Below are the primary types of Profit and Loss questions you might encounter on the GMAT:

1. Basic Profit or Loss Calculation

These are straightforward problems where you need to determine the profit or loss from a given cost price and selling price. Such questions test your understanding of the fundamental definitions and formulas of profit, loss, and their percentages.

2. Profit/Loss Percentage

These questions involve finding the percentage profit or loss made on a transaction. Often, the problem will provide either the cost price or the selling price and require you to compute the missing variable.

3. Marked Price and Discount

Marked Price and Discount questions ask you to calculate the selling price after a discount is applied to a marked price. These problems may also combine profit calculations, where you’ll need to determine how the discount impacts overall profitability.

4. Successive Transactions

In these questions, a product may be bought and sold multiple times, with each transaction involving a certain percentage of profit or loss. You’ll need to calculate the overall impact on the final selling price.

5. Break-even Analysis

Break-even problems focus on finding the price or quantity at which no profit or loss occurs. They help test your understanding of the relationship between cost, revenue, and profit.

Understanding these categories ensures you can identify and apply the right formula or method during the exam. Let’s now delve into 15 practice questions to solidify your grasp of these concepts.

GMAT Profit and Loss Questions and Answers 

Profit and Loss questions are a common type of problem in the GMAT Quantitative section, designed to test your ability to apply basic mathematical concepts in real-world scenarios. By practicing a variety of questions, you can sharpen your problem-solving skills and improve your speed and accuracy for this section. Here are some questions and solutions to help you understand Profit and Loss problems:

Question 1

A shopkeeper buys an item for $800 and sells it for $920. What is the profit percentage?

Solution
To find the profit percentage:
Profit = Selling Price (SP) - Cost Price (CP)
Profit = $920 - $800 = $120

Profit Percentage = (Profit ÷ CP) × 100
= ($120 ÷ $800) × 100 = 15%

The shopkeeper made a 15% profit.

Question 2

A product is sold at a 20% discount on its marked price of $1,000. What is the selling price?

Solution
Discount = 20% of Marked Price (MP)
= (20 ÷ 100) × $1,000 = $200

Selling Price (SP) = Marked Price - Discount
= $1,000 - $200 = $800

The selling price is $800.

Question 3

A retailer marks up the cost price of an item by 30% and then offers a 10% discount. If the cost price is $500, what is the selling price?

Solution
Marked Price (MP) = Cost Price + 30% of Cost Price
= $500 + (30 ÷ 100) × $500 = $650

Discount = 10% of Marked Price
= (10 ÷ 100) × $650 = $65

Selling Price (SP) = Marked Price - Discount
= $650 - $65 = $585

The selling price is $585.

Question 4

A trader purchases 50 items at $40 each and sells all of them for $2,500. What is the profit or loss percentage?

Solution
Total Cost Price (CP) = 50 × $40 = $2,000
Total Selling Price (SP) = $2,500

Profit = SP - CP = $2,500 - $2,000 = $500

Profit Percentage = (Profit ÷ CP) × 100
= ($500 ÷ $2,000) × 100 = 25%

The trader made a 25% profit.

Question 5

An article marked at $750 is sold for $600 after successive discounts of 10% and 10%. What is the cost price?

Solution
First Discounted Price = $750 - (10 ÷ 100) × $750 = $750 - $75 = $675

Second Discounted Price = $675 - (10 ÷ 100) × $675 = $675 - $67.50 = $607.50

The selling price after both discounts is $607.50.

Question 6

A product costs $200 to manufacture. If a retailer wants a 25% profit after giving a 10% discount, what should be the marked price?

Solution
Desired Selling Price (SP) = $200 + (25 ÷ 100) × $200 = $250

Marked Price (MP) = SP ÷ (1 - Discount Percentage)
= $250 ÷ 0.9 = $277.78

The marked price should be $277.78.

Question 7

A dealer sold a TV for $12,000, earning a profit of 20%. What was the cost price?

Solution
Cost Price (CP) = Selling Price ÷ (1 + Profit Percentage)
= $12,000 ÷ 1.2 = $10,000

The cost price was $10,000.

Question 8

A person bought a chair for $400 and sold it at a 15% loss. What was the selling price?

Solution
Loss = 15% of Cost Price (CP)
= (15 ÷ 100) × $400 = $60

Selling Price (SP) = Cost Price - Loss
= $400 - $60 = $340

The selling price was $340.

Question 9

A shopkeeper offers a 15% discount on a product marked at $1,200 and still makes a 10% profit. What is the cost price?

Solution
Selling Price (SP) = $1,200 - (15 ÷ 100) × $1,200
= $1,200 - $180 = $1,020

Cost Price (CP) = SP ÷ (1 + Profit Percentage)
= $1,020 ÷ 1.1 = $927.27

The cost price was $927.27.

Question 10

A trader sells two items for $600 each. On one, he gains 20%, and on the other, he loses 20%. What is the overall gain or loss?

Solution:
Cost Price of Item 1 = SP ÷ (1 + Gain Percentage)
= $600 ÷ 1.2 = $500

Cost Price of Item 2 = SP ÷ (1 - Loss Percentage)
= $600 ÷ 0.8 = $750

Total Cost Price = $500 + $750 = $1,250
Total Selling Price = $600 + $600 = $1,200

Loss = Total Cost Price - Total Selling Price = $1,250 - $1,200 = $50

Overall loss = $50.

Question 11

A product is marked at $800 and sold at $640 after a 20% discount. If the cost price is $500, what is the profit percentage?

Solution
Profit = Selling Price - Cost Price
= $640 - $500 = $140

Profit Percentage = (Profit ÷ CP) × 100
= ($140 ÷ $500) × 100 = 28%

The profit percentage is 28%.

Question 12

A trader buys goods at a 25% discount on the marked price of $1,000 and sells them at a 10% profit on the marked price. What is the selling price?

Solution
Cost Price (CP) = Marked Price - Discount
= $1,000 - (25 ÷ 100) × $1,000 = $750

Selling Price (SP) = Marked Price + 10% of Marked Price
= $1,000 + $100 = $1,100

The selling price is $1,100.

Question 13

An article is bought for $900 and sold at $1,080. What is the profit percentage?

Solution
Profit = SP - CP
= $1,080 - $900 = $180

Profit Percentage = (Profit ÷ CP) × 100
= ($180 ÷ $900) × 100 = 20%

The profit percentage is 20%.

Question 14

A retailer purchases a batch of goods for $5,000. He marks the goods up by 50% but then offers a 30% discount. What is the selling price?

Solution
Marked Price (MP) = $5,000 + 50% of $5,000
= $7,500

Selling Price (SP) = MP - 30% of MP
= $7,500 - (30 ÷ 100) × $7,500
= $5,250

The selling price is $5,250.

Question 15

A seller incurs a loss of 10% by selling an article for $450. What should be the selling price to earn a 20% profit?

Solution
Cost Price (CP) = SP ÷ (1 - Loss Percentage)
= $450 ÷ 0.9 = $500

Desired Selling Price (SP) = CP × (1 + Profit Percentage)
= $500 × 1.2 = $600

The selling price to earn a 20% profit should be $600.

Tips to Score in GMAT Profit and Loss Questions

Scoring well in Profit and Loss questions on the GMAT requires a combination of understanding the basic concepts, practicing the right strategies, and applying them efficiently under exam conditions. These problems often involve calculating percentages, markups, discounts, and losses, which may seem tricky at first, but with the right approach, they can become easier to tackle. Here are some useful tips to help you score well on GMAT Profit and Loss questions:

1. Understand Key Formulas

The core of solving Profit and Loss problems is having a clear understanding of key formulas such as:

• Profit/Loss = Selling Price (SP) - Cost Price (CP)
• Profit Percentage = (Profit ÷ Cost Price) × 100
• Loss Percentage = (Loss ÷ Cost Price) × 100

2. Use Approximations for Quick Calculations

Sometimes, exact answers may not be needed, especially if you’re pressed for time. In such cases, using approximations or rounding off values can help you get to the answer faster. This can be particularly useful when dealing with percentages or large numbers.

3. Work with Ratios and Proportions

Profit and Loss problems often involve ratio and proportion calculations. Learn to quickly identify relationships between quantities, such as the ratio of profit or loss to the cost price. Understanding these relationships will allow you to solve problems more efficiently, especially when the values change proportionally.

4. Master Marked Price and Discount Calculations

Many questions involve finding the selling price after a discount or markup. Remember that:

• Selling Price = Marked Price - Discount
• Marked Price = Selling Price ÷ (1 - Discount Percentage)

Being able to rearrange these equations quickly will help you solve such problems without any confusion.

5. Practice with Different Scenarios

GMAT Profit and Loss questions come in different formats. You may face problems where the discount is offered on the marked price, or where the profit/loss is calculated based on a series of transactions. The more variety you expose yourself to in practice, the more adaptable you will be during the exam.

Avoid Overcomplicating the Problem

If a problem feels too complicated, step back and reassess. Often, these questions are designed with simple solutions in mind, so avoid overthinking. Break the problem into smaller parts, and focus on the key details, such as cost price, selling price, and percentages, that will directly help you arrive at the correct solution.

Use the Process of Elimination

If you’re unsure about the answer, use the process of elimination. Exclude the clearly incorrect options and focus on the remaining ones. This can save you time and increase your chances of selecting the right answer, especially when dealing with complex percentage-based questions.

Time Management is Crucial

Profit and Loss problems are typically straightforward once you get the hang of the concepts, but they can also be time-consuming. Practice under timed conditions to ensure that you don’t spend too much time on a single question during the exam. Aim to spend no more than 2-3 minutes per question to ensure you can complete the entire section.

From the Desk of Yocket

Being able to quickly and accurately calculate profit margins, break-even points, and discounts not only improves your performance on the exam but also equips you with practical business skills. It’s important to approach these questions methodically. Break them down into smaller steps, use the formulas effectively, and practice consistently. 

Over time, this will not only improve your GMAT score but also help you develop the problem-solving abilities that are critical for a successful career in business. As you continue your journey toward business school, know that Yocket Prep is here to provide the support, insights, and guidance you need to reach your goals.