Middle Years

# 4.07 Profit and loss

Lesson

When referring to increases and decreases in money, we will often use the terms profit and loss. Profit is used when referring to an increase in money while a loss refers to a decrease in money. These two terms can be used when talking about flat changes in money or percentage changes in money.

### Flat changes in money

When calculating flat changes in money, we will often refer to the cost price and the sale price. The cost price is how much money we paid for an object and the sale price is how much money we earned by selling the object.

We can find the flat change in money as a directed number by subtracting the cost price from the sale price. This will tell us the net change in money.

Net change in money

The net change in money is the directed number indicating how much money was earned after buying and selling an object.

Net change = Sale Price - Cost Price

A positive net change indicates money gained and a negative net changes indicates money lost.

#### Worked Example

Stephen bought a cinnamon roll for $\$3$$3 and sold it for \7$$7.

What was his net change in money as a directed number? Did Stephen gain or lose money?

Think: We are given that the cost price of the roll was $\$3$$3 and the sale price was \7$$7. We can calculate the net change by subtracting the cost price from the sale price.

Do: Subtracting the cost price from the sale price, we get:

F