Computing Profit Sharing Ratio requires that , we reduce the share acquired by incoming partner from the existing share of the existing partners. This would give us the new profit ratio of existing partners who have sacrificed their shares and this can be compared with the profit share of other partners to calculate the new PSR.
Question : –
A , D and K are partners sharing profits and losses in the ratio of 4 , 3 and 1 respectively. K acquires 1/5th share from A and D equally.New profit sharing ratio among partners will be:
Explanation : –
= (16:11:13)/40
= 16 : 11 : 13