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What Do You Mean by Super Profit?

Here we will learn about the meaning and the significance of the term Super Profit. Tap to know more about such interesting topics.

Question: WHat do you mean by Super Profit?

Answer: Super profit is defined as the excess of expected future profit incurred compared to the forecasted profit. By this method, we determine the extra profits in our business over time. The super profit method is utilized to determine the valuation of your firm’s goodwill. The goodwill is assessed by multiplying the number of super-profits with the exact quantity of years of asset acquisition. 

In mathematical language, super profit = Expected average profit – the normal value of profit.