**Change in Profit Sharing Ratio**

Profit sharing ratio refers to the proportion in which the profits of a partnership firm are distributed among the partners. It is determined by the partnership agreement and may be based on various factors such as the capital invested, the effort put in by each partner, or the special skills brought in by a particular partner. However, there may be situations where the partners decide to change the profit sharing ratio. Let's discuss the reasons for such a change and the implications it may have on the partnership.

**Reasons for Change in Profit Sharing Ratio:**

1. Change in Capital Contribution: If the partners decide to change their capital contributions in the partnership, it may lead to a change in the profit sharing ratio. For instance, if a partner increases their capital investment, they may expect a larger share of the profits.

2. Change in Partner Responsibilities: If the responsibilities of the partners change over time, such as one partner taking on more management or operational duties, the profit sharing ratio may be adjusted to reflect the increased contribution of that partner.

3. Change in Partner Agreement: Partnerships are typically based on mutually agreed terms, and these terms can be amended with the consent of all the partners. If the partners feel that the existing profit sharing ratio is not fair, they may decide to revise it based on their new understanding and agreement.

**Implications of Change in Profit Sharing Ratio:**

1. Financial Impact: A change in the profit sharing ratio will directly affect the amount of profit received by each partner. If a partner's share increases, they will receive a larger portion of the profits, while other partners will receive a reduced share.

2. Motivation and Incentives: The profit sharing ratio can impact the motivation and incentives of the partners. If the ratio is changed to reward a partner's increased efforts or contributions, it can serve as a strong motivating factor for them to continue working hard for the success of the partnership.

3. Resentment and Discontent: However, a change in the profit sharing ratio may also lead to resentment and discontent among the partners if they feel that the new ratio is unfair or not justified. It is crucial for any changes to be discussed and agreed upon in a transparent and fair manner to maintain harmony within the partnership.

In conclusion, a change in the profit sharing ratio can occur due to various reasons such as changes in capital contributions or partner responsibilities. It has direct implications on the financial distribution of profits and can influence the motivation and satisfaction levels of the partners. Therefore, any changes should be made with careful consideration and open communication among all the partners to ensure a fair and harmonious partnership.