Question

Difference between sacrificing ratio and new profit sharing ratio

Answer 1

Difference between sacrificing ratio and new profit sharing ratio

Sacrifice Ratio ÷ It refers to ratio in which old partner agree to sacrifice its share of profit in favour of new partner

• Sacrifice Ratio = Old ratio - new ratio.
• It is calculated at the time of admission of partner.
• It reduces the profit share of existing partner .

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New ratio ÷ It refers to that ratio in which continuing partner acquire the share of profit of outgoing partner.

• New ratio = gaining ratio + old ratio
• It is calculated at the time of both admission,and retirement
• It increases the profit share of existing partner

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