A, B and C are partners. They have invested Rs.35000, Rs. 25000 and 10,000 respectively for the same period. If the total profit is Rs. 18000, Find the share of A

A, B and C are partners. They have invested Rs.35000, Rs. 25000 and 10,000 respectively for the same period. If the total profit is Rs. 18000, Find the share of A

To determine the share of Partner A in the total profit, you need to follow a few key steps given below.

Partner A's investment: Rs. 35,000

Partner B's investment: Rs. 25,000

Partner C's investment: Rs. 10,000

Total profit: Rs. 18,000

Investment period: Same for all partners

Determine the Total Investment:

Sum of all partners' investments:

35,000 (A) + 25,000 (B) + 10,000 (C) = Rs. 70,000

This total amount represents the combined capital invested.

Calculate the Ratio of Investments:

We need to establish the ratio in which profits will be shared. The ratio is based on the amount each partner invested:

Partner A: Rs. 35,000

Partner B: Rs. 25,000

Partner C: Rs. 10,000

These amounts give us the ratio 35,000 : 25,000 : 10,000

Simplifying this, we get:

7 : 5 : 2

Determine the Total of the Ratios:

Sum of the ratios:

7 + 5 + 2 = 14

This sum is essential for calculating the individual shares of profit.

Calculate Partner A's Share of the Profit:

Use the ratio to find out how much profit each partner gets. For Partner A

Share of A = (7/14) x 18,000

Simplify the fraction and multiply by the total profit

(1/2) x 18,000 = 9,000

Therefore, Partner A's share of the profit is Rs. 9,000.

Concept of Profit Sharing in Partnerships

Profit sharing in partnerships is a fundamental concept in mathematics that ensures a fair distribution of earnings among partners based on their contributions. This system rewards partners proportionately to their investment and time involved in the business.

Capital Contribution:

• Each partner invests a specific amount of money, known as capital, into the business.
• The amount of capital invested by each partner is crucial in determining their share of the profits.

Profit Ratio:

• The profit ratio is the proportion in which the profits are divided among partners.
• This ratio is typically based on the amount of capital each partner has invested.
• If partners invest for different periods, the time factor is also considered.

Total Profit:

• The total profit is the net earnings of the business after deducting all expenses.
• This profit is distributed among the partners according to the agreed-upon ratios.

Calculation of Shares:

• To calculate each partner's share, the total profit is multiplied by the partner's profit ratio.
• The sum of all partners' shares should equal the total profit.

Rules of Profit Sharing

• A partnership agreement should outline how profits and losses are to be shared.
• This agreement helps avoid disputes and ensures transparency.
• Profits are distributed in proportion to the capital invested by each partner.
• If partners have invested different amounts, each partner’s share is calculated based on their respective investment.
• If the investment periods vary, the profit share is adjusted to reflect the duration for which the capital was invested.
• This ensures that partners who invest for longer periods are compensated accordingly.
• If any partner reinvests their share of the profit into the business or withdraws their capital, this affects the profit sharing ratio.
• The partnership agreement should address how such scenarios are handled.