Two or more people can get together to do
business by pooling their resources. The money put in by each of the partners
is called his “INVESTMENT” or “CAPITAL.” .
All the people who have invested money in the
partnership are called PARTNERS. .
While two or more partners would have
invested money, it is not necessary that all of them should be involved in the
day-to-day running of the business. The partners involved in the day-to day
activities of the business are called “working partners” and the others are
called “sleeping partners” or “dormant partners.” .
The profits left after paying the working
partners’ remuneration/commission are shared amongst all the partners.
Sometimes, the partners also take interest on their invest-ments and only the remaining
profits are shared by the partners. .
Sharing of profits among the partners also
depends on the understanding between the partners. However, if no special
scheme of sharing the profits is specified (in a problem), then the profits are
shared based on the investments of the partners. There are three different
possibilities that exist here. .
If the partners invest DIFFERENT amounts each
for the SAME period of time, then the profits at the end of the year are shared
in the ratio of their investments. .
If the partners invest the SAME amounts for
DIFFERENT periods of time, then the profits at the end of the year are shared
in the ratio of the time periods for which their respective investments have
been in business. .
If the partners invest DIFFERENT amounts and
the time periods for which their investments are in the business are also
DIFFERENT, then the profits at the end of the year are shared in the ratio of
the product (investment x time period) for each partner. .
There CAN be problems that are modelled along
the sharing of profits in partnerships. An example of this type is where a
particular facility (like renting a tractor for ploughing their fields by three
different people) is used by more than one party and the rent has to be shared
by all the concerned parties - similar to sharing of profits in a partnership. .
Ashok started a business with an investment
of Rs.10,000. After a few months, Alok joined him with an investment of
Rs.12,000. At the end of one year from the start, they shared the total profit
equally. After how long did Ashok join? .
Ratio of profits of Ashok and Alok = (Ratio
of investments of Ashok and Alok) (Ratio of time periods of Ashok and Alok). .
Let us say Alok joined after x months. .
(10000) (12) : 12000 (12 - x) = 1 : 1
&⇒ x = 2
Praveen and Naveen started a business with
investments of Rs.20000 and Rs.24000 respectively. At the end of one year, the
total profit they shared was Rs.1000 more than the difference in their profit
shares. Find the total profit. .
profits of Praveen and Naveen
= Ratio of their respective investments = 5 :
Let the profit shares of Praveen and Naveen
be 5x and 6x respectively. .
6x + 5x = 6x - 5x + 1000
x = 100
Total profit = 11x = Rs.1100.