Partnership Formula For Bank Exams

What is Partnership?

A partnership is whenever at least two or more individuals join hands with a shared
objective to achieve benefits. Each member contributes either time, cash, or licenses
to enable the association firm to harvest benefits.
The partner who invests only money is called a Sleeping Partner and a partner who
invests money and also manages the business is called the working partner.

Types of Partnership

There are two types of partnership. They are, simple partnership and compound
partnership

● Simple Partnership: In Simple partnerships, all the resources are invested

for the same time period by all the investors i.e. the capital (or other
resources) stays in the business for the same duration. In this, the profit is
distributed in proportion of their contributed resources.

Formula

If P and Q contributed Rs. a and b respectively for one year in business, then their
profit or loss at that time will be:

P’s benefit (or misfortune) : Q’s profit(or misfortune) = a : b

● Compound Partnership: In a compound partnership, the money is invested

during different periods of time by multiple investors. The benefit-sharing
proportion is ascertained by duplicating the capital contributed with the unit of
time (generally months).

Formula

P1 : P2 = C1 × T1 : C2 × T2

P1 = Partner 1’s Profit.

C1 = Partner 1’s Capital.
T1 = Time period for which Partner 1 contributed his capital.
P2 = Partner 2’s Profit.
C2 = Partner 2’s Capital.
T2 = Time period for which Partner 2 contributed his capital
Important Partnership Formula For Bank Exams

● When investments of all the partners are at the same time, the pofit or loss is
distributed among the partners in the ratio of their investments.

For example, A and B invest Rs. x and Rs. y respectively for a year in a business,
then at the end of the year:

(A’s share of profit) : (B’s share of profit) = x : y.

● When investments for different time periods, then equivalent capitals are
calculated for a unit of time by taking (capital x number of units of time). Now
profit or loss is divided in the ratio of these capitals.

For example, 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)= xp : yq