Shortcut Trick
Profit ratio = Capital ratio (since time is identical for all partners).
Ratio of A : B : C = 40,000 : 60,000 : 1,00,000 = 2 : 3 : 5.
Total profit ratio parts = 2 + 3 + 5 = 10 parts.
10 parts = ₹40,000 ⇒ 1 part = ₹4,000.
A's share = 2 parts = 2 × ₹4,000 = ₹8,000.
∴ The correct answer is ₹8,000.
Alternate Method
Investment & Profit Ratio
₹40k
Ratio: 2
A
₹60k
Ratio: 3
B
₹100k
Ratio: 5
C
Total Profit = ₹40,000 (10 Ratio Units)
Given:
Investment of A = ₹40,000
Investment of B = ₹60,000
Investment of C = ₹1,00,000
Total Profit at the end of the year = ₹40,000
Formula Used:
Profit Ratio = (Capital of A × Time) : (Capital of B × Time) : (Capital of C × Time)
Calculations:
⇒ Since the time period is 1 year for all, the profit ratio relies entirely on their initial investments.
⇒ Profit Ratio of A, B, and C = 40,000 : 60,000 : 1,00,000
⇒ Dividing each term by 20,000, we get the simplified ratio = 2 : 3 : 5
⇒ Sum of profit ratios = 2 + 3 + 5 = 10 units
⇒ Total profit representing 10 units = ₹40,000
⇒ 1 unit of profit = 40,000 ÷ 10 = ₹4,000
⇒ A's share of profit is 2 units.
⇒ A's share = 2 × 4,000 = ₹8,000
∴ The correct answer is ₹8,000.
Additional Information
Simple Partnership
When all partners invest their capital for the exact same time period, their profits or losses are distributed directly in the ratio of their invested amounts.
Compound Partnership
When partners invest their capital for different time periods, the profit ratio is determined by the product of their respective capital and the total time it was invested (Profit = Capital × Time).
Sleeping Partner
A sleeping partner provides capital but does not actively participate in running the business. Their share of the profit is generated purely based on the financial investment ratio.
Working Partner
An active partner who manages the daily operations of the business. They often receive a fixed salary or a specific percentage of the total profit for their management before the rest of the profits are divided.