A, B, and C are partners sharing profits in the ratio of 5: 3: 2. C retires and his share is taken by A. Calculate new profit-sharing ratio of A and B.

SOLUTION

Old Ratio (A, B and C) = 5: 3: 2
C retires from the firm.
His profit share = 210
C’s share is taken by A in entirety

New Ratio = Old Ratio + Share acquired from C
A’s New Share = 5/10+2/10 = 7/10
B’s New Share = 3/10+0 = 310
∴ New Profit Ratio (A and B) = 7: 3


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