Partnership Formulas

1. Basic Profit Sharing Formula

Partner’s Share of Profit = \frac{Partner’s Investment \times Time Period}{Total Investment \times Time Period}

The profit is divided based on the ratio of investment and time.

Profit Ratio = \frac{Investment of Partner A}{Investment of Partner B}

Profit is shared in the ratio of investments for equal time periods.

Profit Ratio = \frac{Investment of Partner A \times Time of A}{Investment of Partner B \times Time of B}

Profit is shared based on investment and time for each partner.

Profit Ratio = \frac{Original Partner’s Investment \times Time Period}{New Partner’s Investment \times Remaining Time}

The new partner’s share is based on their investment and time in the business.

Adjusted Profit Ratio = \frac{Remaining Capital of A \times Time Period}{Remaining Capital of B \times Time Period}

Adjusted profit reflects the remaining capital and time invested.