Multiple choice

A, B and C are partners in a business sharing in the ratio of 5 : 3 : 2. B retires from the firm and his share was taken up by A and C in the ratio of 2 : 1. What is the new profit sharing ratio of the partners?

  1. 5 : 2

  2. 4 : 3

  3. 7 : 3

  4. 6 : 5
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

B's share of 3/10 is divided between A and C in a 2:1 ratio. A gets (2/3) * (3/10) = 2/10, and C gets (1/3) * (3/10) = 1/10. New share for A = 5/10 + 2/10 = 7/10; new share for C = 2/10 + 1/10 = 3/10. The new ratio is 7:3.

AI explanation

B's retiring share of 3/10 is distributed between A and C in their gaining ratio of 2:1. A gains 2/3 of 3/10, which equals 2/10, making A's new share 5/10 + 2/10 = 7/10. C gains 1/3 of 3/10, which equals 1/10, making C's new share 2/10 + 1/10 = 3/10. The new profit sharing ratio of A to C is therefore 7:3.

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