Financial Applications of Percentages

We have really covered all of the skills required for working with percentages. We can apply these skills to more practical problems. One area that often uses percentages is when we go shopping (and more specifically, finance in general). The hardest part of working with these types of problems is actually understanding what each problem means, and what steps to take to solve it. Here are a few definitions of common words that we may see in problems involving money and percentages:

• Profit - If we make money on the sale of an item, we say we have made a profit. For example, if we purchase something for $100 and sell it for $140, we have made $40 profit. 
• Loss - If we lose money on the sale of an item, we say we have made a loss. For example, if we purchase an item for $50 and sell it for $30, we have lost $20 so we say we have made a loss. 
• Mark-up - When a shop buys an item from their suppliers, they then increase the price before they sell it to us. We call this a mark-up. The mark-up is often stated as a percentage. For example, a store may buy a couch for $550 from their supplier but then mark it up by 50% before they sell it to us. To work out the selling price, we need to increase $550 by 50%. 
• Selling price - This is the price that stores sell their goods to us for. 
• Cost price - This is the price that the stores pay for their goods before they put their mark-up on it. In the example from the definition of "Mark-up", the store paid $550 for the couch so we call this the cost price of the couch. 

These definitions will help you to understand exactly what the question is asking from you. To practice using these, work through a worksheet which can be found by clicking here. The worksheet is also in the "Worksheets" tab. 

As always, if you have any questions feel free to comment on this post, or email or chat to me in person.