Shortcut Trick
In partnership, Profit Ratio = Ratio of (Investment × Time).
Working in terms of thousands (k) to simplify calculations:
Sohan's effective capital = (90 × 8) + (60 × 4) = 720 + 240 = 960
Rohan's effective capital = 150 × 7 = 1050
Profit Ratio = 960 : 1050 = 96 : 105 = 32 : 35
∴ The correct answer is 32:35.
Alternate Method
Given:
Sohan's initial investment = ₹90,000
Time for which Sohan invested his initial amount = 5 + 3 = 8 months
Amount withdrawn by Sohan after 8 months = ₹30,000
Remaining time for Sohan's adjusted investment = 12 − 8 = 4 months
Rohan's investment = ₹1,50,000
Rohan joined after 5 months, so his investment time = 12 − 5 = 7 months
Formula Used:
Profit Ratio = (Investment1 × Time1) : (Investment2 × Time2)
0m
5m
8m
12m
Sohan
₹90k × 8m
₹60k × 4m
Rohan
₹150k × 7m
Effective Capital = Investment × Time
Calculations:
⇒ Sohan's remaining investment after withdrawal = 90,000 − 30,000 = ₹60,000
⇒ Sohan's effective capital = (90,000 × 8) + (60,000 × 4)
⇒ Sohan's effective capital = 7,20,000 + 2,40,000 = 9,60,000
⇒ Rohan's effective capital = 1,50,000 × 7 = 10,50,000
⇒ Profit Ratio (Sohan : Rohan) = 9,60,000 : 10,50,000
⇒ Ratio = 96 : 105
Dividing both sides by 3:
⇒ Ratio = 32 : 35
∴ The correct answer is 32:35.
Additional Information
Partnership Profit Sharing
Profit is shared among partners strictly based on their effective capital. The effective capital is calculated as the product of the capital invested and the time duration of the investment.
Compound Partnership
When partners invest for varying time intervals, or they alter (add/withdraw) their invested capital mid-way through the business term, it represents a compound partnership. The total effective capital is the sum of (capital × time) for each sub-period.
Working vs Sleeping Partner
A working partner actively manages the business and frequently takes a specified salary or percentage of the profit before the remainder is divided. A sleeping partner simply invests funds without engaging in day-to-day operations and receives only their proportionate share.