Explanation:

In a partnership firm, the profit sharing ratio is the proportion in which the partners share the profits and losses of the business. This ratio is initially determined at the time of formation of the partnership, and it specifies how the partners will divide the profits among themselves.

However, there are certain circumstances in which the profit sharing ratio may be changed, even for old partners. One such circumstance is a change in the agreement among all the partners.

Change in the Agreement:
When there is a change in the agreement among all the partners, it means that all the partners have mutually agreed to alter the terms and conditions of the partnership. This could be due to various reasons such as changes in the business environment, expansion of the business, retirement or admission of new partners, or any other significant changes that affect the partnership.

Impact on Profit Sharing Ratio:
When there is a change in the agreement, it may result in a change in the profit sharing ratio among the partners. This means that the proportion in which the partners were initially sharing the profits may no longer be applicable.

For example, if a new partner is admitted to the partnership, the profit sharing ratio may be adjusted to accommodate the new partner's capital contribution and skills. Similarly, if a partner retires from the partnership, the profit sharing ratio may be revised to allocate the profits among the remaining partners.

Importance of Determining the New Profit Sharing Ratio:
Determining the new profit sharing ratio is essential to ensure fairness and equity among the partners. It helps in aligning the partners' interests and contributions to the business and ensures that the profits are distributed in a manner that reflects the current dynamics of the partnership.

Additionally, determining the new profit sharing ratio is crucial for maintaining transparency and avoiding disputes among the partners. It provides a clear understanding of each partner's entitlement to the profits and helps in fostering a harmonious and collaborative partnership.

In conclusion, the new profit sharing ratio is determined even for old partners when there is a change in the agreement among all the partners. This change may occur due to various reasons, and determining the new profit sharing ratio is essential for maintaining fairness, transparency, and harmony in the partnership.