Understanding the Existing Profit-Sharing Ratio
The existing profit-sharing ratio among partners A, B, and C is 5:4:3. To make calculations easier, we can convert this ratio into fractional form:
- A's share = 5/(5+4+3) = 5/12
- B's share = 4/(5+4+3) = 4/12
- C's share = 3/(5+4+3) = 3/12
Admission of New Partner D
When a new partner, D, is admitted, they receive a 10% share of the profits. This means that D's share = 10/100 = 1/10.
Calculating the Remaining Profit Share
After admitting D, the total profit that remains for A, B, and C is 100% - 10% = 90%.
Reallocating the Remaining Share
The remaining 90% will be shared among A, B, and C in the old ratio of 5:4:3.
- Total parts = 5 + 4 + 3 = 12
- A's new share = (5/12) * 90% = 37.5%
- B's new share = (4/12) * 90% = 30%
- C's new share = (3/12) * 90% = 22.5%
New Profit-Sharing Ratio
Now, let's summarize the new profit-sharing ratio including D:
- A's share = 37.5%
- B's share = 30%
- C's share = 22.5%
- D's share = 10%
Final Profit-Sharing Ratio
Thus, the new profit-sharing ratio among A, B, C, and D is:
- A : B : C : D = 37.5 : 30 : 22.5 : 10
This ratio reflects the contributions from the existing partners while accommodating the new partner D.