Partnership - Facts and Formula

Partnership: When two or more than two persons run a business jointly, they are called partners and the deal is known as partnership.
Ratio of Division of Gains:
- When investments of all the partners are for the same time, the gain or loss is distributed a among the partners in the ratio of their investments.
  Suppose A and B invest Rs. x and Rs. y respectively for a year in a business, then at the end of the year:
  
  (A's share of profit) : (B's share of profit) = x : y.
- When investments are for different time periods, then equivalent capitals are calculated for a unit of time by taking (capital x number of units of time). Now, gain or loss is divided in the ratio of these capitals.
  Suppose A invests Rs. x for p months and B invests Rs. y for q months,
  then
  (A's share of profit) : (B's share of profit) = xp : yq.
Working and Sleeping Partners: A partner who manages the business is known . as a working partner and the one who simply invests the money is a sleeping partner.