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Identify the ratio and the total profit.

Business/Management

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6 steps

  1. Identify the ratio and the total profit.

    The profit is divided among new plant, reserves, and dividend in the ratio $3:7:9$.
    The total profit is Sh. 380,000.

  2. Calculate the total number of ratio parts.

    The sum of the ratio parts is 3+7+93 + 7 + 9.

    3+7+9=193 + 7 + 9 = 19

  3. Calculate the value of one ratio unit.

    Divide the total profit by the total number of ratio parts.

    Value of one unit=Total profitTotal ratio parts\text{Value of one unit} = \frac{\text{Total profit}}{\text{Total ratio parts}} Value of one unit=380,00019\text{Value of one unit} = \frac{380,000}{19} Value of one unit=20,000 Sh.\text{Value of one unit} = 20,000 \text{ Sh.}

  4. Calculate the amount allocated to new plant.

    The ratio for new plant is 3.

    New plant=3×Value of one unit\text{New plant} = 3 \times \text{Value of one unit} New plant=3×20,000\text{New plant} = 3 \times 20,000 New plant=60,000 Sh.\text{New plant} = 60,000 \text{ Sh.}

  5. Calculate the amount allocated to reserves.

    The ratio for reserves is 7.

    Reserves=7×Value of one unit\text{Reserves} = 7 \times \text{Value of one unit} Reserves=7×20,000\text{Reserves} = 7 \times 20,000 Reserves=140,000 Sh.\text{Reserves} = 140,000 \text{ Sh.}

  6. Calculate the amount allocated to dividend.

    The ratio for dividend is 9.

    Dividend=9×Value of one unit\text{Dividend} = 9 \times \text{Value of one unit} Dividend=9×20,000\text{Dividend} = 9 \times 20,000 Dividend=180,000 Sh.\text{Dividend} = 180,000 \text{ Sh.}

    The values are:

    • Value of one unit: Sh.20,000\boxed{\mathbf{Sh. 20,000}}
    • New plant: Sh.60,000\boxed{\mathbf{Sh. 60,000}}
    • Reserves: Sh.140,000\boxed{\mathbf{Sh. 140,000}}
    • Dividend: Sh.180,000\boxed{\mathbf{Sh. 180,000}}
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