Question

x,y and z were partners sharing profits in the ratio 5:4:1. x retires from the firm. the new profit sharing ratio will be_​

Answer 1

Answer:

The new profit sharing ratio will be 13 : 7 .

Given:

• x, y and z were partners sharing profits in the ratio of 5 : 4 : 1

• x retires from the firm.

To find:

• The new profit sharing ratio.

Solution:

Let constant be n

Therefore, profit is shared as 5n, 4n and 1n among x, y and z respectively.

Hence,

If total profit is 100%

5n + 4n + 1n = 100

=> 10n = 100

=> n = 10%

Hence, x gets 50% of profit, y gets 40% of profit and z gets 10% of profit.

If x retires, his 50% profit will be distributed equally among y and z .

So y and z will each get 25% of profit more.

Now, y gets 40 + 25 = 65% of profit and

z gets 10 + 25 = 35% of profit.

New ratio of profit sharing will be

y/z = 65/35

=> y/z = 13/7

=> y : z = 13 : 7

The new profit sharing ratio will be 13 : 7 .