Ratio of Division of Gains
• The amount investment of all the partners are for the same time period, the gain or loss amount is distributed among the partners in the ratio of their investments amounts.
Formula:- Capital x Time= Profit
Suppose, Prashant and Anil invest some money Rs. M1 and M2 respectively for a year in a business, at the end of year profit will be distributed among them
( Prashant share of profit ) : ( Anil share of profit ) = M1 x 12 : M2 x 12 = M1 : M2 = Prashant : Anil
• When investments are for different time periods, then equivalent capital are calculated a unit of time by taking (Capital x number of unit of time).
