Shortcut Trick
Profit Ratio = (Capital × Time)
Arvind : Bhavin : Chandan = (80 × 12) : (120 × 8) : (160 × 4)
⇒ Profit Ratio = 960 : 960 : 640 = 3 : 3 : 2
Total parts = 3 + 3 + 2 = 8 parts ≡ ₹1,05,000
Chandan's share (2 parts) = ₹1,05,000 × (2 ÷ 8) = ₹26,250.
∴ The correct answer is ₹26,250.
Alternate Method
Given:
Arvind's investment = ₹80,000 for 12 months
Bhavin's investment = ₹1,20,000 for (12 − 4) = 8 months
Chandan's investment = ₹1,60,000 for (12 − 8) = 4 months
Total profit = ₹1,05,000
Arvind ₹80k × 12m = 960k (3 parts) Bhavin ₹120k × 8m = 960k (3 parts) Chandan ₹160k × 4m = 640k (2 parts) Total Profit = ₹1,05,000 (8 parts)
Formula Used:
Profit Ratio = (C1 × T1) : (C2 × T2) : (C3 × T3)
Calculations:
⇒ Profit Ratio of A : B : C = (80,000 × 12) : (1,20,000 × 8) : (1,60,000 × 4)
⇒ Ratio = 9,60,000 : 9,60,000 : 6,40,000
⇒ Dividing by 3,20,000, we get the simplified Ratio = 3 : 3 : 2
⇒ Sum of profit ratios = 3 + 3 + 2 = 8 parts
⇒ Chandan's share = (2 ÷ 8) × Total Profit
⇒ Chandan's share = (1 ÷ 4) × 1,05,000
⇒ Chandan's share = ₹26,250
∴ The correct answer is ₹26,250.
Additional Information
Profit Ratio in Partnership
The profit share of any partner is directly proportional to the product of their capital invested and the time duration of the investment.
Working vs Sleeping Partner
A working partner actively manages the business and usually receives a fixed salary or percentage of total profit before the remaining profit is distributed among all partners based on their investments.
Joining Mid-way
When a partner joins a business mid-way, their effective time period is calculated from the date of joining to the end of the business cycle (typically 12 months).