Electronic Graduate Management Admission Test (e-GMAT) 2025 – 400 Free Practice Questions to Pass the Exam

The correct choice involves dividing the profit by the cost price and then multiplying by 100, which directly calculates the profit percentage. This process allows you to express the profit as a fraction of the cost price, enabling the determination of how much profit is made in relation to the original investment.

To contextualize this, when calculating profit, the formula for profit can be expressed simply as total sales minus total costs. Once profit is determined, to find the profit percentage, you need to establish what portion of the cost price this profit represents. By taking the profit amount, dividing it by the cost price, and multiplying by 100, you convert this fraction into a percentage form that is easier to interpret. This method is standard in financial analysis, allowing for clear communication of profitability in relation to investment.

This process is fundamental for businesses and individuals alike when making informed decisions based on profit margins. Understanding profit percentages is vital for evaluating performance and making price-setting decisions.