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The Differences between Sacrificing ratio & Gaining Ratio in information support like:
1. Meaning
It is the ratio in which old partners agree to sacrifice their share of profit in favor of new partners/partner
It is the ratio in which continuing partner acquires the share of profit from outgoing partner/partner
2. Calculation
Sacrificing Ratio = Old Ratio – New Ratio
Gaining Ratio = New Ratio – Old Ratio
3. Time
It is calculated at the time of admission of new partners/partner.
It is calculated at the time of retirement/death of old partners/partner.
4. Objective
It is calculated to ascertain the share of profit and loss given up by the existing partners in favor of new partners/partner.
It is calculated to ascertain the share of profit and loss acquired by the remaining partners (of the new firm in case of retirement) from the retiring or deceased partner.
5. Effect
It reduces the profit share of the existing partners.
It increases the profit share of the remaining partners.
All these ratios are calculated at the time of starting a firm or at the time of admission of the new partner into the firm. The ratios are need to be calculate for profit sharing ratio of the firm.
