# Partnership Concept and Shortcut Methods

When more than one person agree to invest their money to run a business or firm then this kind of agreement is called

**. The persons involved in the partnership are called***partnership**partners.*
There are two types of partners.

**Sleeping Partner:**Sleeping partner is the person who provides only investment but does not take part in running the business.**Working Partner:**Working partner is the person who not only invests the money but also takes part in running the business. For this work he is paid some salary or some percent of profit in addition.

There are two types of partnership.

**Simple Partnership:**In simple partnership, capitals of partners are invested for the same period of time.**Compound Partnership:**In compound partnership, capitals of partners are invested for the different period of time.

**Basic Formulas**

Capital of A : Capital of B = Profit of A : Profit of B

If two partners A and B are investing their money for different period of time to run a business then

Capital of A × Time period of A : Capital of B × Time period of B = Profit of A : Profit of B

Example

**Jack and Jill start a business by investing $ 2,000 for 8 months and $ 3,000 for 6 months respectively. If their total profit si $ 510 and then what is profit of Jill?**

Sol:

Sol:

Capital of Jack = 2000 and Time period = 8 months

Capital of Jill = 3000 and Time period = 6 months

So, Profit of Jack : Profit of Jill = 8 : 9

So we have 8 + 9 = 17 parts of total profit.

Out of this 17 parts, Jack will get 8 parts and Jill will get 9 parts.

Now, total profit is 510

So, One Part = 510/17 = 30.

Jill’s profit = 30 × 9 = 270 and

Jack’s profit = 30 × 8 = 240.

If n partners are investing for different period of time then

**C**

_{1}T_{1}: C_{2}T_{2}: C_{3}T_{3}: … : C_{n}T_{n}= P_{1}: P_{2}: P_{3}: … : P_{n}
Where C is the capital invested, T is time period of capital invested and P is profit earned.

Example

**Raju, Kamal and Vinod start a business by investing Rs 5,000 for 12 months, Rs 8,000 for 9 months and Rs 10,000 for 6 months. If at the end of the year their total profit is Rs 2000 then find the profit of each partner.**

Sol:

Sol:

Raju’s investment is 5000 for 12 months.

Kamal’s investment is 8000 for 9 months.

Vinod’s investment is 10000 for 6 months.

So their ratio of investments is

5000 × 12 : 8000 × 9 : 10000 × 6

60 : 72 : 60

5 : 6 : 5

So their profit,

Raju : Kamal : Vinod = 5 : 6 : 5

So there are 5 + 6 + 5 = 16 parts of profit.

Out of these 16 parts, Raju will get 5 parts, Kamal will get 6 parts and Vinod will get 5 parts.

So, Total profit = 2000

One part = 2000/16 = 125

Raju’s profit = 5 × 125 = 625

Kamal’s profit = 6 × 125 = 750

Vinod’s profit = 5 × 125 = 625

**Shortcut Methods**

**Rule 1:**

If two partners are investing their money C

_{1}and C_{2}for equal period of time and their total profit is P then their shares of profit areIf these partners are investing their money for different period of time which is T

_{1}and T

_{2}, then their profits are

Example

**Rule 2:**

If n partners are investing their money C

If these partners are investing their money for different period of time which is T

_{1}, C_{2}, …, C_{n}for equal period of time and their total profit is P then their shares of profit areIf these partners are investing their money for different period of time which is T

_{1}, T_{2},… , Tn then their profits are
Example

**Raju, Kamal and Vinod start a business by investing Rs 5,000 for 12 months, Rs 8,000 for 9 months and Rs 10,000 for 6 months. If at the end of the year their total profit is Rs 2000 then find the profit of each partner.**

Sol:

Sol:

Let’s Say C

_{1}= 5000, T

_{1}= 12

C

_{2}= 8000, T

_{2}= 9

C

_{3}= 10000, T

_{3}= 6

P = 2000