Shortcut Trick
Profit ratio = (Investment of A × Time of A) : (Investment of B × Time of B)
Profit ratio = (45000 × 8) : (60000 × 6)
Profit ratio = 360000 : 360000 = 1 : 1
Total profit = ₹36,000, so A's share = 1 / 2 × 36000
A's share = ₹18,000
∴ The correct answer is ₹18,000.
Alternate Method
Given:
Investment of A = ₹45,000
Time period of A = 8 months
Investment of B = ₹60,000
Time period of B = 6 months
Total Profit = ₹36,000
Formula Used:
Profit Ratio = (C1 × T1) : (C2 × T2)
Partner A
₹45,000 × 8 mo
Profit: 360000
Partner B
₹60,000 × 6 mo
Profit: 360000
Ratio = 1 : 1
Calculations:
⇒ Profit share of A : Profit share of B = (45000 × 8) : (60000 × 6)
⇒ Ratio = 360000 : 360000
⇒ Simplified Ratio = 1 : 1
⇒ Total profit ratio parts = 1 + 1 = 2 parts
⇒ Given, 2 parts = ₹36,000
⇒ 1 part = 36000 ÷ 2 = ₹18,000
⇒ A's share = 1 part = ₹18,000
∴ The correct answer is ₹18,000.
Additional Information
Working vs Sleeping Partner
A working partner receives a fixed salary or a specific percentage of the profit for managing the business. The remaining profit is distributed among all partners based on their capital and time invested. A sleeping partner only receives their share based on their capital investment.
Joining Mid-way in Business
If a partner joins the business x months after it starts and the total accounting period is 1 year (12 months), their effective investment duration for calculating the profit ratio is taken as (12 − x) months.
Multiple Partners
For a business with multiple partners, the profit ratio is always the compound ratio of their investments and respective time periods. Profit Ratio = (C1 × T1) : (C2 × T2) : (C3 × T3).