Shortcut Trick
Profit ratio A : B = (1,20,000 × 10) : (1,60,000 × 7) = 15 : 14.
Total profit units = 15 + 14 = 29 units.
Given B's share (14 units) = ₹16,800.
Value of 1 unit = 16,800 ÷ 14 = ₹1,200.
Total profit (29 units) = 29 × 1,200 = ₹34,800.
∴ The correct answer is ₹34,800.
Alternate Method
Given:
Investment by A = ₹1,20,000
Investment by B = ₹1,60,000
Time period for A = 10 months
Time period for B = 7 months
B's profit share = ₹16,800
Formula Used:
Profit Ratio = (Capital of A × Time of A) : (Capital of B × Time of B)
Partner A1.2L × 10 monthsProfit: 15 UnitsPartner B1.6L × 7 monthsProfit: 14 Units14 Units = ₹16,800 → 29 Units = ₹34,800
Calculations:
⇒ Profit Ratio of A : B = (1,20,000 × 10) : (1,60,000 × 7)
⇒ Profit Ratio = 12,00,000 : 11,20,000
⇒ By simplifying, we get Profit Ratio = 120 : 112 = 15 : 14
⇒ Let A's profit be 15x and B's profit be 14x.
⇒ Total profit = 15x + 14x = 29x
⇒ We are given that B's profit share is ₹16,800.
⇒ 14x = 16,800
⇒ x = 16,800 ÷ 14 = 1,200
⇒ Total profit = 29 × 1,200 = 34,800
∴ The correct answer is ₹34,800.
Additional Information
Partnership Profit Ratio
When investments are made for different time periods, the profit is distributed in the ratio of the product of capital and time. P1 : P2 = (C1 × T1) : (C2 × T2).
Active vs Sleeping Partner
A sleeping partner only invests capital, while an active partner also manages the business. An active partner may receive a fixed salary or percentage from total profit before the remainder is split.
Joining Mid-way
If a partner joins x months after the start of a year, their investment time period will be calculated as (12 − x) months for the annual profit distribution.