Gaining Ratio

It is the ratio of share acquired by the partners, on change in Profit Sharing ratio, admission, retirement or death of a partner.

Gaining ratio = New Profit-sharing ratio - Old Profit-sharing ratio

or

[Gain = New share - Old share]

Use of Gaining Ratio:

  1. On Admission of a partner
  2. On change in Profit-sharing ratio
  3. Retirement of a partner
  4. Death of a partner.

Interesting Point

It's interesting to note that in the above case, if the answer is in negative, the result is sacrifice.

But, It is not necessary that all the remaining partners gain; one or some partners can sacrifice also on retirement/death of a partner.

The Basic condition is the total gain should be equal to the total of the share of the retiring/deceased partner and the sacrifice made by any partner.

Sacrifice Ratio