PARTNERSHIP

GETTING STARTED

People invest in business to make profits. When two or more people invest in a business, it is known as ‘Partnership’.

Whenever a profit is made by a business, amount invested and duration for which the amount was invested dictates the ratio in which profit is shared by the partners.

 

Profit ( directly proportional ) Investment

Profit (directly proportional) Time for which investment is done.

Therefore,

 

 P1 – Profit by 1st Person

I1 – Investment by 1st person

T1– Time for which money was invested by 1st person

P2 – Profit by 2nd Person

I2 – Investment by 2nd person

T2 Time for which money was invested by 1st person

Eg. A and B entered into a partnership where A invested Ra.300 for first 3 months and Rs. 600 for next 9 months. On the other hand, B invested Rs.500 for the entire year. In what ratio will their profit of Rs. 820 be divided?

Soln:.

P1/P2  

= ((300×3)+(60×9))/(500×12)

 = 6300/6000

 = 21/20

If the profit was Rs.41, A would receive Rs. 21 and B would receive Rs.20.

When profit is Rs.820, A will receive 820/41 x 21 = Rs. 420 and B will receive Rs. 400.