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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 certain number of years by the total number of such years. Normal profit is the profit earned by the similar business firms under normal conditions. Normal profit = Capital employed x Normal rate of return Capital employed = Fixed assets + Current assets – Current liabilities |
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