Partnership Formula Definition and Examples

A partnership is something where a formal agreement between two or more people is made and
agreed to be the co-owners, distribute responsibilities for running an organization and share the
income or losses that the business generates. In government recruitment exams, many questions are
asked related to the partnership. While solving the questions, you might get confused on the right
formula and tricks to apply to get the answer. In this post, we are going to discuss the important
formulas related to partnership along with examples. The study notes will help you solve the
questions related to this topic easily.

What is a Partnership?
Whenever two or more people join hands with a same objective to achieve benefits. Each member
contributes either time, cash or licenses to enable the association firm to harvest benefits.
The partner who only invests money is called a Sleeping Partner and a partner who invests money
and also manages the business is called the working partner. Some other important points associated
with partnership are given below.

Types of Partnerships:
There are two types of partnerships in the form of simple and compound partnerships. The details of
both types of partnerships are given below.
1) Partnership: It refers to a business association between two or more than two persons who run a
business together and share the total profit at an agreed proportion. The persons who enter into a
partnership are called partners.
2) Working partner: A partner who is actively involved in the business and manages the business is
known as an active partner.
3) Sleeping partner: A partner who invests money but does not involve or look after the business is
known as a sleeping partner.
4) Simple partnership: It refers to a partnership in which each partner invests capital for the same
period.
5) Compound partnership: It refers to a partnership in which the partners invest capital for different
periods.
Questions:
Example 1: X and Y invest 21,000 and 17,500 respectively in a business and at the year they
make a profit of 26,400. Find their individual shares in the profit.
Sol: Since, both their investments are there in the business for the same duration (1 year), profits will
be shared in the ratio of their investments i.e. 21,000: 17,500 = 6: 5.
∴ X share = 6/11 * 26,400= 14, 400
Y share= 5/11 * 26,400= 12,000

Example 2: Krishna starts a business with 45,000. Three months later Arjun joins him with
30,000. At the end of the year, in what should they share the profits?
Sol: Sharing of profits will be in the ratio of investments multiplied by the time period.
Hence the ratio is :
(45, 000 * 12) : (30, 000 * 9) = 2 : 1

Example 3: Nakul started a business with 25,000 and after 4 months Sanjay joined him with
60,000. Nakul received 58,000 including 10% of the profits as a commission for managing the
business. What amount did Sanjay receive?
Sol: Ratio of shares of profit is : (25, 000 * 12) : (60, 000 * 8) = 5: 8
Let the total profit be P, as Nakul receives 10% of this as commission, the remaining 90%  of    P is
shared in the ratio of 5: 8.
Hence Nakul’s receipts will be 5/13th of 90% of total profit plus his commission.
0.1P + 5/1/3(0.9P) = 58, 000
⇒ 5.8P/13 = 58,000 ⇒ P= 1, 30, 000
Therefore, Sanjay share will be 8/13 *0.9 * 1,30, 000= 72, 000

Example 4: A started a business with 40, 000. After 2 months B joined him with 60, 000. C
joined them after some more time with 1, 20,000. At the end of the year, out of a total profit of 3,
75, 000, C gets 1,50, 000 as his share. How many months after B joined the business did C join?
Sol: The ratio of the shares of profits is : (40, 000 *12) : (60, 000 * 10) : (1,20, 000 * T),  here T is the
number of months that C was with the business
=  24: 30 : 6T = 4: 5: T
Hence, C share = T/ (T+9)
This is equivalent to 1,50, 000 out of 3,75,000
⇒ T/ (T+9) = 0.4 ⇒ T= 6
So, C was with the business for 6 months. Hence C joined the business 4 months after, B
joined the business.

Example 5: Peter started a business with 20, 000. John joined him 4 months later with 30, 000.
After 2 months Peter withdrew 5,000 of his capital and 2 more months later, John brought in
20, 000 more. At the end of the year what should be the ratio in which they should share the
profits?
Sol: Here, even for each individual, the capital was not the same for the entire period his money was
in the business. So, the term of the ratio for a person will be the sum of products of investment
multiplied by time period for different parts of the year.
Peter has 20, 000 for 6 months and then since he withdrew 5,000, he had only 15, 000 for the rest of
the 6 months. His term of the ratio will be
(20, 000 * 6) + ( 15, 000 * 6) = 2,10,000
John joined with 30,000 which remained unchanged for 4 months and then he brought in 20, 000
more. So he had 50, 000 for 4 months only as he joined 4 months after the business began. His term of
the ratio will be
(30, 000 * 4) + (50, 000 * 4) = 3, 20, 000
Hence, the ratio of shares of the profit will be 2,10, 000 : 3, 20, 000 = 21 : 32.

Example 6: Ram, Krishna, and Arjun start a business with 30K, 40K, and 50K respectively.
Ram stays for the entire year. Krishna leaves the business after two months but rejoins after
another 4 months but only with 3/4th of his initial capital. Arjun leaves after 3 months and
rejoins after another 5 months but with only 4/5 of his capital. If the year-end profit is 27,900,
how much more than Krishna did Arjun get?
Sol: The ratio of the investments of Ram, Krishna, and Arjun is:
(30,000*12): (40,000*2+3/4 *40,000 *6): (50,000*3+ 4/5*50,000*4)
⇒ (360,000) : (2,60,000) : (3,10,000) ⇒ 36:26:31
Let’s Ram’s share is 36x, Arjun’s share is 31x and Krishna’s share is 26x, then the difference is 31x -
26x = 5x.
Hence the amount, Arjun get more than Krishna is: 5x/93x * 27, 900 = 1500

Example 7: A and B starts a business with different capitals. A was to get 15% of the profit as
salary and the rest was to be divided in the ratio of their investments. Had the entire profit been
distributed in the ratio of their investments, B would have got 1350 more than what he actually
got. What is B’s actual share of the profit?
Sol: Let the profit be P and the ratio of profits of A and B is : A: B
Therefore, the profit B would have got is: B/A+B * P……………………………………..(1)
However, A gets 15% of the profit as a salary, so the remaining profit is 0.85P.
Now, the profit gets by B is: B/A+B *0.85P………………………………………….(2)
Subtract (2) from (1)
0.15BP/A+B = 1,350
BP/A+B=9,000
Put this value in Eq. (2)
The profit get by B is: 9,000 * 0.85 = 7,650

Example 8: A, B, C starts a partnership. The capital of A, B, C are in the ratio of 10:9:6, and the
time period of A: B is in the ratio of 2:3. B gets 10, 800 shares out of a total profit of 26, 000. If
A’s capital was in the business for 8 months, for how many months was C’s capital there?
Sol: Given, A was in the business for 8 months, therefore, B must be in the business for 12
months. As A:B = 2:3
Let the months for C’s capital presence is x.
A:B:C=10:9:6
8:12:x ⇒    80:108: 6x
B’s share in profit = 108/(188+6x )* 26,000
This is equivalent to 10,800
108/(188+6x )* 26,000= 10,800
260= 188+6x
6x=72
X=12

Questions
1. Three partners shared the profit in a business in the ratio 5 : 7 : 8. They had partnered for 14
months, 8 months and 7 months respectively. What was the ratio of their investments?
A. 5 : 7 : 8 B. 20 : 49 : 64 C. 38 : 28 : 21 D. None of these
Ans. (B)
Explanation: Let their investments be Rs. x for 14 months, Rs. y for 8 months and Rs. z for 7 months
respectively.
Then, 14x : 8y : 7z = 5 : 7 : 8.
Now, 14x/8y = 5/7 => 98x = 40y => y = 49/20 x
And, 14x/7z = 5/8 => 112x = 35z => z = 112/35 x = 16/5 x.
So x : y : z = x : 49/20 x : 16/5 x = 20 : 49 : 64.

2. P, Q, R enter into a partnership & their share are in the ratio 1/2 : 1/3 : 1/4, after two months,
P withdraws half of the capitals & after 10 months , a profit of Rs 378 is divided among them .
What is Q’s share?
A. 114 B. 120 C. 134 D. 144
Ans. (D)
Explanation: The ratio of their initial investment = 1/2 : 1/3 : 1/4
= 6 : 4: 3
Let’s take the initial investment of P, Q and R as 6x, 4x and 3x respectively
A:B:C = (6x * 2 + 3x * 10) : 4x*12 : 3x*12
= (12+30) : 4*12 : 3*12
=(4+10) : 4*4 : 12
= 14 : 16 : 12
=7:8:6
B’s share = 378 * (8/21) = 18 * 8 = 144

3. A, B, C subscribe Rs. 50,000 for a business. A subscribes Rs. 4000 more than B and B Rs.
5000 more than C. Out of a total profit of Rs. 35,000, A receives:
A. Rs. 8400 B. Rs. 11,900 C. Rs. 13,600 D. Rs. 14,700
Ans (D)
Explanation: Let C = x.
Then, B = x + 5000 and A = x + 5000 + 4000 = x + 9000.
So, x + x + 5000 + x + 9000 = 50000
=> 3x = 36000
=> x = 12000
A : B : C = 21000 : 17000 : 12000 = 21 : 17 : 12.
So A’s share = Rs. (35000 x 21/50) = Rs. 14,700.

4. 29. P, Q, R enter into a partnership. P initially invests 25 lakh & adds another 10 lakhs after
one year. Q initially invests 35 lakh & withdrawal 10 lakh after 2 years and R invests Rs 30
Lakhs . In what ratio should the profit be divided at the end of 3 years?
A. 18:19:19 B. 18:18:19 C. 19:19:18 D. 18:19:19
Ans (C)
Explanation: P:Q:R = (25*1+35*2) : (35*2 : 25*1) : (30*3)
= 95 : 95 : 90
= 19 : 19: 18

5. A and B started a business in partnership investing Rs. 20,000 and Rs. 15,000 respectively.
After six months, C joined them with Rs. 20,000. What will be B’s share in total profit of Rs.
25,000 earned at the end of 2 years from the starting of the business?
A. Rs. 7500 B. Rs. 9000 C. Rs. 9500 D. Rs. 10,000
Ans (A)
Explanation: A : B : C = (20,000 x 24) : (15,000 x 24) : (20,000 x 18) = 4 : 3 : 3.
So B’s share = Rs. (25000 x 3/10) = Rs. 7,500.

6. In a business, A and C invested amounts in the ratio 2 : 1, whereas the ratio between amounts
invested by A and B was 3 : 2 . If Rs 157300 was their profit, how much amount did B receive?
A. 48000 B. 48200 C. 48400 D. 48600
Ans (C)
Explanation: Assume that investment of C = x
Then, investment of A =2x
Investment of B = 4x/3
A:B:C = 2x : 4x/3 : x = 2 : 4/3 : 1 =6 : 4 : 3
B’s share = 157300 * 4/(6+4+3) = 157300*4/13
= 12100*4 = 48400

7. A, B, C rent a pasture. A puts 10 oxen for 7 months, B puts 12 oxen for 5 months and C puts
15 oxen for 3 months for grazing. If the rent of the pasture is Rs. 175, how much must C pay as
his share of rent?
A. Rs. 45 B. Rs. 50 C. Rs. 55 D. Rs. 60
Ans (A)
Explanation: A : B : C = (10 x 7) : (12 x 5) : (15 x 3) = 70 : 60 : 45 = 14 : 12 : 9.
C’s rent = Rs.(175 x 9/35) = Rs. 45.

8. If 4 (P’s Capital ) = 6 ( Q’s Capital ) = 10( R’s Capital ), then out of the total profit of Rs 4650,
R will receive
A. 600 B. 700 C. 800 D. 900
Ans (D)
Explanation: Let P’s capital = p, Q’s capital = q and R’s capital = r
Then
4p = 6q = 10r
=> 2p = 3q = 5r
=>q = 2p/3
r = 2p/5
P : Q : R = p : 2p/3 : 2p/5
= 15 : 10 : 6
R’s share = 4650 * (6/31) = 150*6 = 900

9. Three partners A, B, C start a business. B’s Capital is four times C’s capital and twice A’s
capital is equal to thrice B’s capital. If the total profit is Rs 16500 at the end of a year, Find out
B’s share in it.
A. 4000 B. 5000 C. 6000 D. 7000
Ans (C)
Explanation: Suppose C’s capital = x then
B’s capital = 4x (Since B’s Capital is four times C’s capital)
A’s capital = 6x ( Since twice A’s capital is equal to thrice B’s capital)
A:B:C =6 x : 4x : x
=6:4:1
B’s share = 16500 * (4/11) = 1500*4 = 6000

10. P and Q invested in a business. The profit earned was divided in the ratio 2 : 3. If P invested
Rs 40000, the amount invested by Q is
A. 40000 B. 50000 C. 60000 D. 70000
Ans (C)
Explanation: Let the amount invested by Q = q
40000 : q = 2 : 3
=> 40000/q = 2/3
=> q = 40000 * (3/2) = 60000
11. A and B invest in a business in the ratio 4 : 2. If 4% of the total profit goes to charity and A's share
is Rs. 845, the total profit is ?
Sol. Step 1: Let us assume that the total profit to be Rs.100.
Step 2: After paying to charity, A's share = Rs.(95 x (4/6))= Rs. 63.33. If A's share is Rs. 63.33, total
profit = Rs. 100.
If A's share Rs. 845, total profit =((100/63.33)x 845)= 1334.28

12. A, B and C jointly thought of engaging themselves in a business venture. It was agreed that A
would invest Rs. 6500 for 6 months, B, Rs. 8400 for 5 months, and C, Rs. 10,000 for 3 months. A
wants to be the working member for which, he was to receive 5% of the profits. The profit earned was
Rs. 7200. Calculate the share of B in the profit.
Sol. Step 1: For managing, A received = 5% of Rs. 7200 = Rs. 360.
Balance = Rs. (7200 - 360) = Rs. 6840.
Step 2: Ratio of their investments = (6500 x 6) : (8400 x 5) : (10000 x 3)
  = 39000 : 42000 : 30000  = 13 : 14 : 10
B's share = Rs.(6840 x (14/37))= Rs. 2588.108

13. A, B, and C enter into a partnership in the ratio (7/3) : (4/3) : (3/2) After 4 months, A increases his
share by 60%. If the total profit at the end of one year be Rs. 20,500, then B's share in the profit is:
Sol. Step 1: Ratio of initial investments =((7/3) : (4/3) : (3/2))= 14 : 8 : 9.
Step 2: Let the initial investments be 14x, 8x, and 9x.
 A : B : C =(14x x 4 + (160/100) x 14x x 8): (8x x 12) : (9x x 12)  
= 235.2x : 96x : 108x = 98:40:45
Hence, B's share = Rs.(20500 x (40/183))= Rs. 4480.87

14. X, Y, Z subscribe Rs. 50,000 for a business. A subscribes Rs. 4000 more than B and B Rs. 5000
more than C. Out of a total profit of Rs. 40,000, A receives?
Sol. Step 1: Let C = x.
Then, B = x + 5000 and A = x + 5000 + 4000 = x + 9000.
So, x + x + 5000 + x + 9000 = 50000
=> 3x = 36000 => x = 12000
A : B : C = 21000 : 17000 : 12000 = 21 : 17 : 12.
 A's share = Rs.(40000 x(21/50)) = Rs. 16800.