Multiple choice

X and Y are sharing profits in the ratio of $3 : 1$. Z joined the firm by taking $1/3^{rd}$ share. The new profit sharing ratio is ___________.

  1. $3 : 1 : 2$
  2. $3 : 2 : 1$
  3. $6 : 5 : 4$
  4. $4 : 1 : 3$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

X:Y = 3:1. Z takes 1/3 share. Remaining share for X and Y = 2/3. X's new share = 3/4 * 2/3 = 6/12 = 1/2. Y's new share = 1/4 * 2/3 = 2/12 = 1/6. Z's share = 1/3 = 2/6. Ratio = 1/2 : 1/6 : 2/6 = 3:1:2.

AI explanation

Calculate the new profit sharing ratio by letting Z's share be 1/3, which leaves a remaining profit pool of 2/3 for the existing partners X and Y. Divide this remaining 2/3 pool in their original 3:1 ratio to give X a share of 1/2 and Y a share of 1/6. Expressing these shares with a common denominator of 6 results in a new ratio of 3:1:2.

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