Question

A, B, and C are partners sharing profits in the ratio of 5 : 3 : 2. C retires and his share is taken by A. Calculate new profit-sharing ratio of A and B.

Answer 1

Old Ratio (A, B and C) = 5 : 3 : 2

C retires from the firm.

His profit share = `2/10`

C’s share is taken by A in entirety

New Ratio = Old Ratio + Share acquired from C

`"A's New Share" : 5/10 + 2/10 = 7/10`

`"B's New Share" : 3/10 + 0 = 3/10`

∴ New Profit Ratio (A and B) = 7 : 3