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What are information of new profit sharing ratio sacrifice ratio and gain ratio?

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Question ajoutée par komal bist
Date de publication: 2016/09/01
Ahmed Ezzat Mohamed Nasr
par Ahmed Ezzat Mohamed Nasr , Finance Director , M. Alriyadh Co. (Group of Co.)

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.

Ibrahim Jan
par Ibrahim Jan , GM/Head Supply Chain operations & Logistics , FRONTIER FOUNDRY PVT LIMITED

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.

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