What are ‘Super Profits’?
“The excess of actual/average profit over normal profit is known as super profit.”
For example, a firm has capital employed of ₹ 10,00,000 and its return on capital employed is 15%, i.e., ₹ 1,50,000.
The normal return on capital employed in a similar business is 10%, i.e., ₹ 1,00,000.
The firm has a super profit of ₹ 50,000 (i.e., ₹ 1,50,000 – ₹ 1,00,000).
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