What is Sacrificing Ratio? Definition, Formula & Examples

When a new partner joins a firm, existing partners have to give up a portion of their profit share. This is what is called sacrificing ratio in accounts. In Class 12 Partnership Accounting, this concept is used in the 'admission of a partner' chapter, where calculations reveal which partner is sacrificing how much share.

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What is Sacrificing Ratio?

Sacrificing ratio is the proportion of profit that existing partners give up in favour of a newly admitted partner at the time of admission in a partnership firm.

Sacrificing Ratio Formula

Sacrificing Ratio = Old Ratio – New Ratio

Using this formula, each partner's sacrifice is calculated individually, which helps in proper goodwill adjustment and profit-sharing alignment.

Simple Example

Partners A and B share profits in the ratio 3:2. A new partner C is admitted and the new ratio becomes 2:2:1.

A’s Sacrifice = 3/5 – 2/5 = 1/5
B’s Sacrifice = 2/5 – 2/5 = 0

Here, only A has sacrificed, which is why the goodwill adjustment is also recorded in A's name.

Why Sacrificing Ratio Matters

• for goodwill adjustment
• for revised profit-sharing alignment
• to ensure fair compensation
• for partnership deed compliance

Quick Recap

• Sacrificing ratio is the share given up by existing partners
• formula: Old Ratio – New Ratio
• It is applied in the 'admission of a partner' chapter
• Example-based calculations commonly appear in exams

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