On the eve of the retirement/death of a partner, the continuing partners acquire the profit share of the retiring partner. The ratio in which the outgoing partner’s profit share is gained or acquired by the remaining partners is known as the Gaining ratio. This ratio is calculated by taking the difference between the new ratio and the old ratio of the partners. The following are the major points of difference between the sacrificing ratio and gaining ratio.
Difference between Gaining Ratio and Sacrificing Ratio
| Basis of Difference | Sacrificing Ratio | Gaining Ratio |
|---|---|---|
| Meaning | It is the ratio in which the old partners agree to sacrifice their share of profit in favor of a new partner. | It is the ratio in which the continuing partners acquire the share of profit from an outgoing partner. |
| Calculation | Sacrificing Ratio = Old Ratio – New Ratio | Gaining Ratio = New Ratio – Old Ratio |
| Time | It is calculated at the time of admission of a new partner. | It is calculated at the time of retirement/death of an old partner. |
| Objective | It is calculated to ascertain the share of profit and loss given up by the existing partners in favor of the new partner. | It is calculated to ascertain the share of profit and loss acquired by the remaining partners from the retiring or deceased partner. |
| Effect | It reduces the profit share of the existing partners. | It increases the profit share of the remaining partners. |
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