Profit percentage is a financial metric used to measure the profitability of a business or investment relative to the costs or investments made. It is expressed as a percentage and indicates the portion of profit generated compared to the initial investment or total costs incurred. It represents the percentage of profit generated relative to the initial cost or investment. The formula for calculating profit percentage is as follows:


Profit Percentage = ------------------- × 100

                         Cost or Investment


  • Profit is the amount of money earned above the initial cost or investment.
  • Cost or Investment is the initial amount of money spent to acquire or produce goods, services, or assets.

Example.1) If you invest $1,000 in a business and it generates a profit of $200, then find profit percentage.

Ans.) The profit percentage would be:-


Profit Percentage = --------------- × 100 = 20%


This means that your investment yielded a profit of 20% relative to the initial investment.        (Ans.)

Example.2) If a business generates a profit of $5,000 after incurring costs of $20,000, find the profit percentage.


The profit percentage would be -


Profit Percentage = ---------- × 100%


                    = 25% 

This means that for every dollar invested or spent, the business earned 25 cents in profit.     (Ans.)

It's important to note that profit percentage is just one measure of financial performance, and it's often used in conjunction with other metrics to assess the overall health and success of a business or investment. Profit percentage is commonly used by businesses and investors to assess the efficiency and success of their operations. It provides insight into the return on investment and helps evaluate the overall financial health of an enterprise.