Shortcut Trick
Work with ratios in 10-thousands to simplify the calculation (1 unit = ₹10,000).
Tina's equivalent capital = 10 × 6 + 8 × 6 = 60 + 48 = 108
Meera's equivalent capital = 8 × 6 + 12 × 6 = 48 + 72 = 120
Profit Ratio = 108 : 120 = 9 : 10
∴ The correct answer is 9:10.
Alternate Method
Given:
Tina's initial investment = ₹1,00,000
Meera's initial investment = ₹80,000
After 6 months, Tina withdrew ₹20,000 and Meera added ₹40,000.
₹100k × 6m
₹80k × 6m
Tina
₹80k × 6m
₹120k × 6m
Meera
Total = 1080k
Total = 1200k
Final Ratio = 1080 : 1200 = 9 : 10
Formula Used:
Profit Ratio = (C1 × T1 + C2 × T2) : (C3 × T3 + C4 × T4)
Calculations:
⇒ For the first 6 months, Tina's investment = ₹1,00,000
⇒ For the next 6 months, Tina's investment = ₹1,00,000 − ₹20,000 = ₹80,000
⇒ Total equivalent capital for Tina = (1,00,000 × 6) + (80,000 × 6) = 6,00,000 + 4,80,000 = ₹10,80,000
⇒ For the first 6 months, Meera's investment = ₹80,000
⇒ For the next 6 months, Meera's investment = ₹80,000 + ₹40,000 = ₹1,20,000
⇒ Total equivalent capital for Meera = (80,000 × 6) + (1,20,000 × 6) = 4,80,000 + 7,20,000 = ₹12,00,000
⇒ Profit sharing ratio = Tina's equivalent capital : Meera's equivalent capital
⇒ Profit sharing ratio = 10,80,000 : 12,00,000
⇒ Profit sharing ratio = 108 : 120 = 9 : 10
∴ The correct answer is 9:10.
Additional Information
Partnership Basic Rule
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).
Compound Partnership
If a partner's capital changes during the year, calculate the equivalent capital by multiplying each unique capital amount by the respective number of months it remained invested, then sum them up.
Active vs Sleeping Partner
An active partner takes part in running the business and typically gets a salary or a fixed percentage of the total profits before the remaining profit is divided based on their capital ratios.