X and Y are two partners sharing profits in the ratio of 3:1. Z is admitted for 1/8th share of profits. Calculate the new profit-sharing ratio of X, Y, and Z.
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Answer :-
Old Ratio :
X : Y = 3 : 1
- X's Share = 3/4
- Y's Share = 1/4
Z is admitted for 1/8th share of profits.
- Z's Share = 1/8
Let,
Total profit of all partners = 1
- Z's share = 1/8
Remaining share =
1 - 1/8 = 7/8
New profit sharing Ratio :
X's New share =
=> 3/4 X 7/8 = 21/32
Y's New share =
=> 1/4 X 7/8 = 7/32
Z's share =
=> 1/8 = (1x4) / (8x4)
=> 4/32
New profit sharing Ratio =
- X : Y : Z
- 21/32 : 7/32 : 4/32
=> 21 : 7: 4
Therefore,
New profit sharing Ratio =
X : Y : Z = 21 : 7: 4
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