ratio in which partners share profit and losses before reconstitution of firm
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Sacrificing Ratio: is the ratio in which one or more partners of the firm sacrifice their share of profits in favour of one or more partners of the firm. Gaining Ratio: in which one or more partners gain share of profits as a result of sacrificed share in profits by one or more partners of the firm.
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New Profit-Sharing Ratio: The ratio in which the partners agree to share the profits in future on reconstitution is known as new profit-sharing ratio. e.g. A, B & C are partners sharing profits in the ratio of 5:3:2. They decided to share profits in the future in the ratio of 2:2:1 with effect from 1st April 2019.
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