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PARTNERSHIP
When some persons own and manage a business jointly by investing their money (capital), then
it is called a partnership.
Profit sharing in partnership: Profit is shared in the ratio of (amount invested x time period)
(i)
(ii)
If the partners invest different amounts for the same period of time, then the profits
are shared in the ratio of their investment.
If the partners invest same amount for the different time periods, then the profits
are shared in the ratio of time periods.
Let us say, a partner A invests Rs.R1 for N1 years, and another partner B invests Rs.R 2 for N2 years in
a business, in what ratio will their profits be divided? Yes, it will be (R 1 x N1) : (R2 x N2). Remember,
the profits / loss in a business is always divided in the ratio of the product of capital invested and
the time period of different partners.
Examples:
1) A, B, C,..., I, J invested money in the ratio of 10:11:9:...: 2:1. The duration for which they
invested the money is in the ratio of 1:2:3 :...: 9:10. Who will obtain the maximum profit
and who will obtain the minimum profit at the end of year?
Profit will be distributed in the ratio of product of the time and money of every individual.
So, the ratio of profit = 10 x 1:9 x 2:8 x 3:7 x 4:6 x 5:5 x 6:4 x 7:3 x 8:2 x 9:1 x 10=
10:18:24:28:30:30:28:24:18:10
So, the maximum profit will be obtained by E and F both.
And the minimum profit will be obtained by A and J both.
2) Balma and Salma started a business by investing Rs.45,000 and Rs.54,000. Find the
share of each, out of an annual profit of Rs.99,000.
Ratio of shares of Bhanu and Shafeeq = 45000 : 54000 = 5 : 6
Share of Bhanu
And Share of Shafeeq
= Rs.45000
= Rs.54000
3) Amit starts a business by investing Rs.25,000. After 4 months Bitan joins him with
Rs.50,000. At the end of the year, in what ratio should they share the profits?
Ratio of amount of A and B = 25000 : 50000 = 1:2
Ratio of time periods for A and B = 12 : 8 = 3:2
Ratio of profit sharing = (1x3) : (2x2) = 3:4
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QA Partnership
4) Harsh started a business by investing Rs.30,000. After 3 months Yash jointed him and at
the end of the year, the total profit was divided by them in the ratio of 8 : 11. How
much capital was invested by Yash in the business?
Ratio of capital = 30000: Y
Ratio of time = 12:9= 4:3
Profit sharing ratio = (30000 x 4) : 3Y = 8:11
Therefore Y =
= 55000
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QA Partnership
8) A, B and C started a business with their investments being 37500, 62500 and 100000.
After 6 months A invested the one third of the amount more as before and B invested
one fifth of the amount as before while C withdraw th of the their investments. Find
the ratio of their profits at the end of the year.
Ratio of initial investment = 3:5:8
These investments are for 12 months
Ratio of additional investments = 1:1: (-2)
These investments are for 6 months
Profit sharing ratio = (3x12 + 1 x6) : (5x12 + 1 x6) : (8x12 - 2 x6) = 42:56:84= 3:4:7
9) A started a business with Rs100,000 and after 5 months B joined him with Rs.120,000.
At the end of the year, out of the total profits B received total Rs.3,50,000 including 15%
of the profits as commission for managing the business. What amount did A receive and
what was the total profit?
Profits share of A and B = 100,000 12 : 120,000 7 = 1200000 : 840000 = 10:7
If the profit is 100, then B will get 15 as commission and the remaining 85 will be divided in the
ratio 10:7 amongst A and B. So B will get 15 +
out of 100.
So overall B gets 50% of total profit
So A gets 50% of total profit
So As profit = 350000
Total profit = 700000
10) Sam and Suzy will share the profits in the ratio 3:2. Sam also gets 25% as his commission
of the profit after his commission is paid. If the commission is Rs.10000, then what is
the total profit in the business and what is the amount paid to each partner?
Let the total profit be Rs. P. Therefore profit after paying commission = (P 8000).
However commission of 20% is paid on this amount
So
So P = 50000
Profit after commission = 40000
Sams profit = 24000
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QA Partnership
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