In a partnership firm, A invests \(\frac{1}{6}\)th of the total invest

In a partnership firm, A invests \(\frac{1}{6}\)th of the total investment for \(\frac{1}{6}\)th of the tenure. B invests \(\frac{1}{3}\)rd of the total investment for \(\frac{1}{3}\)rd of the tenure while C invests the remaining part for the full duration. Out of total profit of ₹46,00,000, what shall be C’s share ?

[amp_mcq option1=”₹30,00,000″ option2=”₹32,00,000″ option3=”₹34,00,000″ option4=”₹36,00,000″ correct=”option4″]

This question was previously asked in
UPSC CAPF – 2024
C’s share out of the total profit shall be ₹36,00,000.
In a partnership, the profit share of each partner is proportional to the product of their investment and the duration for which the investment was made.
Let the total investment be $I$ and the total tenure be $T$.
A’s investment $I_A = \frac{1}{6} I$. A’s tenure $T_A = \frac{1}{6} T$.
A’s profit share is proportional to $I_A \times T_A = (\frac{1}{6} I) \times (\frac{1}{6} T) = \frac{1}{36} IT$.

B’s investment $I_B = \frac{1}{3} I$. B’s tenure $T_B = \frac{1}{3} T$.
B’s profit share is proportional to $I_B \times T_B = (\frac{1}{3} I) \times (\frac{1}{3} T) = \frac{1}{9} IT$.

C invests the remaining part of the investment for the full duration.
C’s investment $I_C = \text{Total Investment} – I_A – I_B$.
$I_C = I – \frac{1}{6} I – \frac{1}{3} I = I – (\frac{1}{6} + \frac{2}{6}) I = I – \frac{3}{6} I = I – \frac{1}{2} I = \frac{1}{2} I$.
C’s tenure $T_C = T$ (full duration).
C’s profit share is proportional to $I_C \times T_C = (\frac{1}{2} I) \times T = \frac{1}{2} IT$.

The ratio of the profit shares of A, B, and C is the ratio of their (Investment $\times$ Time) products:
Ratio = $\frac{1}{36} IT : \frac{1}{9} IT : \frac{1}{2} IT$.
Dividing by $IT$ (assuming $I, T > 0$):
Ratio = $\frac{1}{36} : \frac{1}{9} : \frac{1}{2}$.
To simplify this ratio, multiply by the Least Common Multiple (LCM) of the denominators (36, 9, 2), which is 36.
Ratio = $36 \times \frac{1}{36} : 36 \times \frac{1}{9} : 36 \times \frac{1}{2}$
Ratio = $1 : 4 : 18$.

The sum of the ratio parts is $1 + 4 + 18 = 23$.
The total profit is ₹46,00,000.
C’s share of the profit is the total profit multiplied by C’s ratio part divided by the sum of ratio parts.
C’s share = $\frac{18}{23} \times ₹46,00,000$.
$\frac{46,00,000}{23} = 2,00,000$.
C’s share = $18 \times ₹2,00,000 = ₹36,00,000$.

The fundamental principle of profit sharing in a partnership is that profits are distributed in proportion to the capital invested and the time period for which the capital was invested. If investments are $I_1, I_2, …, I_n$ for durations $T_1, T_2, …, T_n$, the profit ratio is $I_1T_1 : I_2T_2 : … : I_nT_n$. The sum of the investments must equal the total investment, and the durations considered for calculating the ratio should be consistent (e.g., all in months or all in years, or simply relative units if the total tenure is used as a base like here).