The ratio in which the old partners agree to give their share of profit in favor of the incoming partner is called............

Sacrificing Ratio

The correct answer is option 3- Sacrificing Ratio.

The ratio in which the old partners agree to give their share of profit in favor of the incoming partner is called Sacrificing Ratio.

The ratio in which the old partners agree to sacrifice their share of profit in favour of the incoming partner is called sacrificing ratio. The sacrifice by a partner is equal to : Old Share of Profit – New Share of Profit.  The new partner is required to compensate the old partner’s for their loss of share in the super profits of the firm for which he brings in an additional amount as premium for goodwill. This amount is shared by the existing partners in the ratio in which they forgo their shares in favour of the new partner which is called sacrificing ratio.