The formula for profit and loss is: Profit or Loss = Selling Price - Cost Price If the result of the formula is positive, it means that the business has made a profit, and if it is negative, it means that the company has incurred a loss. For example, if a business sells a product for $100, and the cost price of the product is $80, the profit earned would be: Profit = Selling Price - Cost Price Profit = $100 - $80 Profit = $20 In this example, the business has earned a profit of $20. If the selling price were lower than the cost price, the result would be negative, indicating that the business has incurred a loss