How to Calculate Loss Percentage in a Purchase?

What is the formula to calculate loss percentage in a purchase?

Given that Aaron bought a motor home for $50,000 and later sold it for $10,000, how do we find the loss as a percentage of the cost price?

Formula to Calculate Loss Percentage:

To calculate the loss percentage in a purchase, we use the following formula:

Loss % = (Cost Price - Selling Price) / Cost Price x 100

When Aaron bought a motor home for $50,000 and later sold it for $10,000, the calculation for the loss percentage would be as follows:

Cost Price = $50,000

Selling Price = $10,000

Using the formula, we have:

Loss % = ($50,000 - $10,000) / $50,000 x 100

Loss % = $40,000 / $50,000 x 100

Loss % = 80%

Therefore, Aaron incurred a loss percentage of 80% in this transaction. Despite this, it is essential to stay positive and learn from such experiences to make better decisions in future purchases. Understanding loss percentage is crucial in evaluating the profitability of a transaction and ensuring wise financial management.