Two partners A and B start a business by investing Rs. 4000 and Rs. 1500 respectively. What will the ratio of their profits at the end of the year?
Question
Two partners A and B start a business by investing Rs. 4000 and Rs. 1500 respectively. What will the ratio of their profits at the end of the year?
Solution
The profit share of partners in a business is directly proportional to their investment and the time period for which they invested in the business.
In this case, both partners A and B are investing for the same time period i.e., for one year. So, their profit share will be in the ratio of their investments.
Investment of A = Rs. 4000 Investment of B = Rs. 1500
So, the ratio of their investments = Investment of A : Investment of B = 4000 : 1500
We can simplify this ratio by dividing both numbers by the greatest common divisor. The greatest common divisor of 4000 and 1500 is 500.
So, the simplified ratio = 4000/500 : 1500/500 = 8 : 3
Therefore, the ratio of their profits at the end of the year will be 8 : 3.
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