CAT 1996 QA Question 4 · Arithmetic - Profit & Loss

Let the price per metre of cloth be Re 1. The shopkeeper buys 120 cm, but pays for only 100 cm. In other words, he buys 120 cm for Rs. 100. So his CP = $\left(\frac{100}{120}\right)$ = Re 0.833 per metre. Now he sells 80 cm, but charges for 100 cm. In other words, he sells 80 cm for Rs. 100. On this he offers a 20% discount on cash payment. So he charges Rs. 80 for 80 cm cloth. In other words, his SP = $\left(\frac{80}{80}\right)$ = Re 1 per metre. So his percentage profit in the overall transaction = $\frac{(1-0.833)}{0.833}=20\%.$