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Example 3: Saud, Ali and Saad started a business with Rs.15,000, Rs.19,000 and Rs.12,000
respectively. Saud manages the business and receives allowance of Rs.16,000 for this
assignment. After 5 months Ali withdraws Rs.9,000 and business is closed after 9 months.
What did each receive in the profit of Rs.58,000?

Solution:
Saud’s capital for 9 months = Rs 15,000
Saud’s effective capital for 1 month = 15,000 x 9
= Rs 135000

Ali’s capital for 5 months = Rs 19,000
Ali’s effective capital for 1 month = 19,000 x 5
= Rs 95,000

Ali’s capital for 4 months = Rs 10,000
Ali’s effective capital for 1 month = 10,000 x 4
= Rs 40,000
Ali’s total capital = 95,000 + 40,000
= Rs 135,000

Saad’s capital for 9 months = Rs 12,000

Saad’s effective capital for 1 month = 12,000 x 9

= Rs 108,000

Total Profit = Rs 58,000

Saud’s Allowance = Rs 16,000

Net Profit = 58,000 - 16,000 = Rs 42,000

Ratios of Capitals:

Saud : Ali : Saad

135000 : 135000 : 108000

135 : 135 : 108

15 : 15 : 12

5 : 5 : 4

Sum of ratios = 5 + 5 + 4 = 14

version: 1.1

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