Question

A and B who share profits in the ratio of 3:2, admit C to give him 1/4th share. Calculate the new profit sharing ratio

Answer 1

New profit sharing ratio =

A : B : C = 9 : 6 : 5

Explanation:

Solution :

★ Old Ratio :

A : B = 3 : 2

• A's Share = 3/5
• B's Share = 2/5

Admit C, to give him 1/4th share

• C's Share = 1/4

Let,

Total Profit of all Partners = 1

• C's Share = 1/4

Remaining Share =

1 - 1/4 = 3/4

★ New Profit Sharing Ratio :

• A's New Share =

= 3/5 × 3/4

= 9/20

• B's New Share =

= 2/5 × 3/4

= 6/20

• C's Share =

= 1/4 = 5/20

★ New Profit Sharing Ratio =

• A : B : C = 9/20 : 6/20 : 5/20

= 9 : 6 : 5

Therefore,

New profit sharing ratio of A, B and C = 9 : 6 : 5