MHB What is the Exact Amount My Friend Owes Me for Our 50% Partnership Investment?

[tahir1]

Hi,
It's a real life math question and this seems the best place to ask.

Me and my friend started a business together on 50% partnership bases. (cost divided by both and profit shared by both).
My friend was lacking some money, so I added additional amount to cover his share.

It's a garments business and been a month sale is going on. The money gathered by sale is re-invested. Now, how much my friend owes me has gone complicated (for me). Here is how I am trying to solve it:

A: Total investment in purchase: 997,660
B: Total cost (rent, salaries etc): 390,652
C: Total sale (including profit): 377,540
D: Total profit: 64,937
E: Net sale (excluding profit): 312,603
F: Friend's investment: 440,000
G: Total Expenses: 1,388,312From that ahead, I'm totally confused how to calculate the exact amount my friend needs to pay in order to us both get 50% investment. The figures change on daily basis as sale, purchase and expenses are going on.

Any help is appreciated.
Thanks

 

[HallsofIvy]

Hi,
It's a real life math question and this seems the best place to ask.

Me and my friend started a business together on 50% partnership bases. (cost divided by both and profit shared by both).
My friend was lacking some money, so I added additional amount to cover his share.

It's a garments business and been a month sale is going on. The money gathered by sale is re-invested. Now, how much my friend owes me has gone complicated (for me). Here is how I am trying to solve it:

A: Total investment in purchase: 997,660
B: Total cost (rent, salaries etc): 390,652
C: Total sale (including profit): 377,540
D: Total profit: 64,937

How did you arrive at any profit at all if "total sale" was less than "total cost" (which apparently does not include "total investment". How are you amortizing that?)

E: Net sale (excluding profit): 312,603
F: Friend's investment: 440,000
G: Total Expenses: 1,388,312From that ahead, I'm totally confused how to calculate the exact amount my friend needs to pay in order to us both get 50% investment. The figures change on daily basis as sale, purchase and expenses are going on.

Any help is appreciated.
Thanks

 

[tahir1]

It's a garments retail business. Products are bought at wholesale price and sold at retail price.
For example, a product price is 200 (wholesale), markup is 30% so its sold on 260.

Terminology "Net sale" refers here to 200. Total sale means 260 and 60 is considered profit.

We are not taking out and distributing profit just yet. Its too early for that, instead we're re-circulating the money adding more items.Issue is, due to sale and additional money being added, it is confusing how to calculate that how much my partner needs to add in order to get us both equal amount invested. Thats allHope I am clear enough?

 

[Wilmer]

The only line that matters is:
"A: Total investment in purchase: 997,660"

Each of you contributed 997,660/2 = 498,830
Your friend borrowed from you in order to make up his share.

Doesn't matter if the business makes money or not:
he owes you whatever amount he borrowed from you.

The purpose of your question is unclear:
are you asking that we act as your accountant,
figure out the NET revenue, then decide what
your "friend" owes you?

If you contributed 75% of investment, then it's simple enough:
you get 75% of revenue, friend gets 25%.

Word of caution:
friends remain friends until they go in business together :)