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ENTRANCEGURU.COM Private Limited

PARTNERSHIP

Partnership: If more than two persons venture into a business, then it is called
Partnership.
When capitals of all the partners are invested for the same period, then the gain or
loss is divided among the partners in the ratio of investments.
If P, Q, R rupees are the investments of three partners A, B, C for the same period.
Profit of A = Profit P / (P + Q + R)
Profit of B = Profit Q / (P + Q + R)
Profit of C = Profit R / (P + Q + R)
The above is known as simple partnership.
When capitals of the partners are invested in different periods, then the profit
is divided in the ratio of the products of time and capital.

Let Rs P, Q, R be the investments of three partners A, B, C the periods being
12 months, 8 months and 7months (Here the second partner joins after 4 months
with Rs. Q and the third after 5 months with Rs. R.
Ratio of capitals = P 12 : Q 8 : R : 7 = r : s : t
Profit of A =
t) s (r
r
12 P
+ +

Profit of B =
t) s (r
s
8 Q
+ +

Profit of C =
t) s (r
t
7 R
+ +

This is called compound partnership
Let us consider the following example
Partner Capital Period (Months)
A

B



C

P

Q

Q Q

R
12

7

5

8

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ENTRANCEGURU.COM Private Limited
Ratio of capitals = (P 12) : (Q 7 + (Q Q) 5) : R B
= r : s : t (say)
Profit of A = (P 12)
t) s (r
r
+ +
etc.
EXAMPLES:

1. Three partners A, B and C start a business with Rs. 35000, Rs.40000, Rs.30000.
If the net profit after an year is 21,000, what is the profit of B?
Ratio of Capitals = 7: 8: 6
Sum = 21
Profit of B = 21000
21
8
= Rs.8000
2. A and B jointly invest Rs.9000 and Rs.10500. After 4 months C joins with
Rs.12500 and B withdraws Rs.2000. At the end of the year, the profit was
Rs.4770. Find the share of each.
Ratio of capitals = (9000 12): (10500 4 + 8500 8): (12500 8)
= 54: 55: 50
Sum = 159
Profit of A = 1620
159
54
4770 = etc.
3. A and B enter into a partnership with capitals in the ratio 4 : 5. After three
months, A withdraws
4
1
and B withdraws
5
1
of their capital. The profit was
Rs.76000 at the end of 10 months. Find their shares of profit.
Money withdrawn by A after three months =
4
1
4 = Rs.1
Money withdrawn by B in the same month =
5
1
5 = Rs.1
A invested Rs.4 for three months and Rs.3 for 7 months
B invested Rs.5 for three months and Rs.4 for 7 months.
Ratio of their capitals = (4 3 + 3 7) : (5 3 + 4 7)
= 33 : 43; Sum = 76
As share =
76
33
76000 = Rs.33000
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Bs share =
76
43
76000 = Rs.43000
4. The ratio of investments of two partners A and B is 11: 12 and the ratio of their
profits is 2: 3. If A invested his capital for 8 months, for what period B invested?
Let A invest Rs.11 for 8 months
Let B invest Rs.12 for x months
Capital ratios = 88: 12x
3
2
x 12
88
=
x = 11
5. A, B and C are three partners in a business. If As capital is twice that of B and
Bs capital is thrice that of C, find the ratio of their profits.
Let Cs capital = x
Profit ratio = 6: 3: 1




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