Question

Sacrificing Ratio:

Options

• New Ratio − Old Ratio

• Old Ratio − New Ratio

• Old Ratio − Gaining Ratio

• Gaining Ratio − Old Ratio

Answer 1

Old Ratio − New Ratio

Explanation:

The Sacrificing Ratio measures how much of their profit share the existing partners give up when a firm is reconstituted. Since partners have a larger share before the change, you find the sacrifice by subtracting their smaller future share (New Ratio) from their original larger share (Old Ratio)