·       When two or more person together do some business, is called partnership.
·       There are two types of partnership’
1.    Simple Partnership
2.    Compound Partnership
·       In Simple Partnership all the partners invest their capital for same period of time
In this type of partnership   Ratio of Profit = Ratio of capitals
·       In Compound Partnership All partners invest their capital for different period of time.
In this Type of partnership   Ratio of Profit = Ratio of product of capital and time period.

·       Apart from partnership there are two types of Partner as well
1.    Active Partner (Claims Profit/Loss  &  Salary)
2.    Sleeping Partner (Claims only Profit)

Example:
Nirmal and Kapil started a business investing Rs. 9000 and Rs. 12000 respectively. After 6 months, Kapil withdrew half of his investment. If after a year, the total profit was Rs. 4600, what was Kapil’s share in it.

Explanation:
Ratio of Profit = Ratio of product of capital and time period.
Nirmal : Kapil = 9000 * 12 : 12000 * 6 + 6000 * 6 = 1 : 1.
Kapils share = Rs. [4600 *(1/2)) = Rs. 2300.

Example:
A and B started a business by investing money in ratio of 5:6. C joined them after few months by sharing an amount equal to B's share. At the end of year 20% profit was earned which was equal equal to Rs 98,000. How much money was invested by C ?

Explanation:

Ratio of Profit = Ratio of product of capital and time period.

A = 5 × 12 = 60
B = 6 × 12 = 72
C = 6 × 6 = 36

Total investment at the end of year = 98000 × 100/20 = Rs 4,90,000

Investment by C = 490000 × 36 / 168 × 2 = Rs 210000