Margin
Margin - the profit percentage on selling price.
How to convert profit percentage into margin and vice-versa?
Here we will basically be dealing with a base change (concept of base change has been dealt in percentage chapter).
10% profit is equivalent to what margin?
Let CP be Rs. 100
So, Profit = 10% of CP = 10% of 100 = Rs. 10
And SP = CP + Profit = 100 + 10 = Rs. 110.
So, Margin = Profit/SP = 10/110 = 1/11 = 9.09%
10% margin is equivalent to what profit percentage?
Let SP be Rs. 100
So, Margin = 10% of SP = 10% of 100 = Rs. 10
And CP = SP – Margin = 100 – 10 = Rs. 90.
So, profit percentage = Profit/CP = 10/90 = 11.11%
Q. Profit on selling price is 20% What must be the actual profit percentage?
Explanations :
Let’s assume selling price to be Rs 100
Profit = 20% of selling price = 20% of 100 = Rs. 20
So, Cost price = 100 - 20 = Rs 80
Hence, Actual profit percentage (with C.P. as the base) = (20/80) x 100 = 25%
Profit = 20% = 1/5
If S.P. = 5, then profit = 1
So, C.P. = 5 – 1 = 4
Hence, Actual profit percentage (with C.P. as the base) = (1/4) x 100 = 25%