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Questions
What is super profit?
What is meant by ‘Super Profit’?
Short Answer
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Solution
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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