A invests ₹40,000 for 12 months and B invests ₹50,000 for 6 months. How should a profit of ₹39,000 be shared?
In the ratio of capital x time: 40,000 x 12 : 50,000 x 6 = 4,80,000 : 3,00,000 = 8 : 5. So A gets 39,000 x 8/13 = ₹24,000 and B gets ₹15,000.
Explain it simply
In a partnership, profit is shared according to how much money each person had at work and for how long. ₹1 lying in the business for 12 months has done twice the work of ₹1 lying there for 6 months. So multiply each person's capital by the months it stayed in, and share in that ratio.
Example
Question: A puts ₹40,000 for 12 months, B puts ₹50,000 for 6 months. Profit ₹39,000. Find the shares.
- A: 40,000 x 12 = 4,80,000. B: 50,000 x 6 = 3,00,000.
- Ratio = 480 : 300 = 8 : 5 (divide by 60).
- Total parts = 13, so one part = 39,000 / 13 = ₹3,000.
- A = 8 x 3,000 = ₹24,000; B = 5 x 3,000 = ₹15,000.
If A also takes a working-partner salary of ₹13,000 out of the profit first, only ₹26,000 is shared 8 : 5. Then A gets 16,000 + 13,000 = ₹29,000 and B gets ₹10,000.
const a = 40000 * 12, b = 50000 * 6;
console.log([(39000 * a) / (a + b), (39000 * b) / (a + b)]); // Output: [24000,15000]What to say in the interview
"Profit is shared in the ratio of capital times time. That's 4.8 lakh to 3 lakh, or 8 to 5, so A gets 24,000 and B 15,000. If anyone has a fixed salary or interest, I take that out before sharing."
Common mistakes
- Sharing in the ratio of capital alone, ignoring time.
- Sharing before deducting a working partner's salary.