The cost-to-selling price ratio is 4:5. What is the profit percentage:__________?
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Answer: C. 25%
Explanation
A cost-to-selling price ratio of four to five means four parts represent cost and five parts represent revenue. Subtracting the cost price from the selling price leaves a net profit of one single part. Dividing the profit of one part by the cost base of four and multiplying by one hundred yields twenty-five percent. Profit percentage is always calculated with respect to the original cost price unless stated otherwise by convention. Financial ratios express proportional relationships between commercial expenditures and incoming sales revenue streams. Basic arithmetic fractions convert directly into percentages by multiplying the decimal quotient by one hundred.
Option A suggests a ten percent profit, which contradicts the fractional parts established by the cost-selling ratio. Option B proposes a twenty percent profit, which would incorrectly use the selling price as the denominator base. Option D offers a thirty percent profit, overestimating the actual return generated by the four-to-five ratio.
- Subject
- Mathematics
- Category
- Mathematics
- Topic
- —
- Difficulty
- medium
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