Why profit or lost us calculated over buying price or cost price?

[chandra21]

Why profit or lost us calculated over buying price or cost price?

 

[HallsofIvy]

In order to calculate what? Are you talking about a percentage?

 

[chandra21]

In order to calculate what? Are you talking about a percentage?

Right sir

 

[tkhunny]

"over" - it isn't.
1) Profit (loss) is useful to determine how business is going.
2) Costs, Prices, and Revenues are all inputs to the P/L statement.
They're all in this, together.

 

[Dr.Peterson]

Why profit or loss is calculated over buying price or cost price

I think you are asking why we calculate percent profit or loss as a percentage of cost price, that is, by dividing the amount of profit or loss by the cost (that is "writing it over the cost", or calculating it relative to the cost).

That is simply what you do if you choose to do that calculation. You can also find the percentage of selling price; that is called the margin. Both are valid calculations.

If you want to know when you would use each of the two calculations, and why, I'll leave that to the finance people here.

 

[chandra21]

I think you are asking why we calculate percent profit or loss as a percentage of cost price, that is, by dividing the amount of profit or loss by the cost (that is "writing it over the cost", or calculating it relative to the cost).

That is simply what you do if you choose to do that calculation. You can also find the percentage of selling price; that is called the margin. Both are valid calculations.

If you want to know when you would use each of the two calculations, and why, I'll leave that to the finance people here.

Yes sir..i will be grateful to u