Question

The profit sharing ratio of A, B and C is \( \frac{5}{10} : \frac{6}{20} : \frac{4}{20} \). What will be the new profit sharing ratio if C retires?

Hint:

When a partner retires, remove their share and simplify the remaining partners' original shares.

Answer 1

To calculate the new ratio, we remove C's share from the ratio because he will no longer participate in profits. A's share is \( \frac{5}{10} = \frac{10}{20} \), and B's share is \( \frac{6}{20} \). C's \( \frac{4}{20} \) share is removed completely. This leaves A and B with 10 and 6, giving a ratio of 10 : 6. To simplify, divide both by 2, resulting in 5 : 3. This method follows the principle that remaining partners continue with their old shares unless stated otherwise.