Shortcut Trick
The Investment Ratio of A : B is 7 : 1.
Total profit units = 7 + 1 = 8 units.
Given, 8 units = ₹2,75,000.
Value of 1 unit = 2,75,000 ÷ 8 = ₹34,375.
Share of A = 7 units = 7 × 34,375 = ₹2,40,625.
∴ The correct answer is ₹2,40,625.
Alternate Method
Given:
Total annual profit = ₹2,75,000
Investment of A = 7 × Investment of B
Formula Used:
Profit Share = Investment × Time period
Calculations:
⇒ Let the investment of B be ₹x.
⇒ Investment of A = ₹7x.
⇒ Ratio of investments (A : B) = 7x : x = 7 : 1.
⇒ Since both invested for the same Time Period (1 year), the profit sharing ratio is the same as the investment ratio.
⇒ Share of A = (7 / (7 + 1)) × 2,75,000
⇒ Share of A = (7 / 8) × 2,75,000
⇒ Share of A = 7 × 34,375
⇒ Share of A = ₹2,40,625.
∴ The correct answer is ₹2,40,625.
Additional Information
Partnership Profit Sharing Rule
Profit is always distributed in the ratio of the product of Capital and Time: P1 : P2 = (C1 × T1) : (C2 × T2).
Simple vs. Compound Partnership
In a Simple Partnership, capitals are invested for the same time. In a Compound Partnership, capitals are invested for different time periods.
Working Partner
A partner who manages the business is a Working Partner and may receive a salary or commission from the profit before the remaining profit is divided.