What is super profit? - Vidyadip

Question

What is super profit?

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Answer

Super profit is the excess of average profit over the normal profit of a business.

Super profit = Average profit – Normal profit

Average profit is calculated by dividing the total of adjusted actual profit of a certain number of years by the total number of such years.

Normal profit is the profit earned by similar business firms under normal conditions.

Normal profit = Capital employed × Normal rate of return

Capital employed = Fixed assets + Current assets – Current liabilities

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