What do you mean by profit sharing ratio??
Answers
Explanation:
That depends upon understanding between partners. I will advice them to make a partnership deed and share profits and loss in equal ratio and for partner A who made all capital he can get interest on captal where as other partner B can get salary for his work. This will solve the dispute of profit sharing ratio and they will get returns for the things they are doing. Moreover if other partner later made investment or start working forfor business they need not to change profit sharing ratio.
OR
The new profit sharing ratio is the ratio in which the old and new partners agrees to share the profit and loss percentage in future after the inclusion of the new partner is known as new profit sharing ratio. Few things that a new partner receives after his inclusion to an existing partnership company
Answer:
In addition to previous answer, profit sharing ratio is the profit and losses of a firm are distributed between the partners. Usually determined by an agreement or deed.
The new profit sharing ratio is calculated by taking in consideration new partner's share in profit and sacrifice and can be calculated using simple ratio where natural numbers represent shares or fractions represent the shares. (Sum of fractions should add up to 1)
Explanation: