X,Y and Z are partners sharing profits in the ratio of 5:4:3 .X retires from the firm and it is decided that new profit sharing ratio between Y and Z will be same as existing between X and Y . Calculate new ratio and gaining ratio .
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Answer:
New Ratio= 5:4 , Gaining Ratio= 8:7
Explanation:
New Profit Sharing Ratio between Y and Z = 5:4 (given that it is equal to old PSR between X and Y). Y's old share = 4/12 = 36/108 (multiplying numerator and denominator by 9) Y's new share = 5/9 = 60/108 (multiplying numerator and denominator by 12). Z's old share = 3/12 = 27/108 (multiplying numerator and denominator by 9), Z's new share = 4/9 = 48/108 (multiplying numerator and denominator by 12). Y's gain = (Y's new share) - (Y's old share) = (60-36)/108 = 24/108 and Z's gain = (Z's new share) - (Z's old share) = (48-27)/108 = 21/108. Gaining ratio of Y and Z = 24/108:21/108 = 24:21 = 8:7 (dividing both sides by 3).
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