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Loss Percentage Formula:
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Loss percentage is a financial metric that calculates the percentage of loss incurred when the selling price of an item is less than its cost price. It helps businesses and individuals understand the magnitude of financial loss in percentage terms.
The calculator uses the loss percentage formula:
Where:
Explanation: The formula calculates the difference between cost price and selling price, divides by the cost price to get the loss ratio, then multiplies by 100 to convert to percentage.
Details: Calculating loss percentage is crucial for financial analysis, business decision-making, inventory management, and understanding investment performance. It helps identify unprofitable products or services.
Tips: Enter cost price and selling price in your local currency. Both values must be positive numbers. If selling price is higher than cost price, the result will show 0% loss (indicating profit instead).
Q1: What is considered a significant loss percentage?
A: This varies by industry, but generally a loss percentage above 10-15% is considered significant and may require business strategy adjustments.
Q2: Can loss percentage be negative?
A: No, loss percentage is always between 0% and 100%. A negative result would indicate profit, which is calculated using a different formula.
Q3: How is this different from absolute loss?
A: Absolute loss shows the actual monetary amount lost (CP - SP), while loss percentage shows the relative loss compared to the original investment.
Q4: When should I calculate loss percentage?
A: Calculate when selling assets, closing business deals, analyzing investment performance, or making pricing decisions for clearance sales.
Q5: What if my selling price is zero?
A: If selling price is zero (giving away for free), the loss percentage would be 100%, meaning you lost the entire cost price.