MHB What are the formulas of partnership in business?

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Partnerships in business involve two or more individuals jointly running a venture, with profits and losses shared based on their investments. When partners invest for the same duration, gains are divided in proportion to their contributions. If investments are made for different time periods, profits are allocated based on equivalent capital calculated as capital multiplied by time. Additionally, partners can be classified as working partners, who manage the business, or sleeping partners, who only invest. Understanding these formulas is essential for accurately determining profit-sharing in partnerships.
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1. Partnership : When two or more than two persons run a business jointly, they are called partners and the deal is known as partnership
2. Ratio of Division of Gains:
(i)When investments of all the partners are for the same time, the gain or loss is distributed among the partners in the ratio of their investments.
Suppose A and B invest Rs. x and Rs. y respectively for a year in a business, then at end of the year
(A's share of profit) : (B's share of profit) = x:y
(ii) When investments are for different time periods, then equivalent capitals are calculated for a unit of time by taking (capital x number of units of time).Now, gain or loss is divided in the ratio of these capitals.
Suppose A invests Rs. x for p months and B invests Rs. y for q months, then
(A's share of profit) : (B's share of profit) = px : qy
3. Working and Sleeping Partners:
A partner who manages the business is known as a working partner and the one who simply invests the money is a sleeping partner
I hope these concepts will be helpful for you to solve some of your math problems.
 
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burgess said:
I hope these concepts will be helpful for you to solve some of your math problems.
Hopefully, thanks for sharing.
 
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