New profit sharing ratio
This query is : Resolved
vishal 22 @
(Querist)
29 May 2015
X and y share profits in 4:1 z is admitted as a new partner and now y and z share the profits in 4 :1 find new profit sharing ratio
CA. Sunil Gokhale
(Expert)
30 May 2015
X and Y share in 4:1 i.e. 4/5 & 1/5.
1/5th share of Y will be shares between Y & Z in 4:1. Their new share will be
Y = 1/5 x 4/5 = 4/25
Z = 1/5 x 1/5 = 1/25
X's share remains unchanged but will be converted to common base 25 as follows:
X = 4/5 x 5/5 = 20/25
New share of X, Y & Z
20/25, 4/25 & 1/25 or 20:4:1
1/5th share of Y will be shares between Y & Z in 4:1. Their new share will be
Y = 1/5 x 4/5 = 4/25
Z = 1/5 x 1/5 = 1/25
X's share remains unchanged but will be converted to common base 25 as follows:
X = 4/5 x 5/5 = 20/25
New share of X, Y & Z
20/25, 4/25 & 1/25 or 20:4:1
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