{"id":1257,"date":"2019-06-15T17:25:02","date_gmt":"2019-06-15T17:25:02","guid":{"rendered":"https:\/\/commerceiets.com\/?p=1257"},"modified":"2019-06-15T17:25:02","modified_gmt":"2019-06-15T17:25:02","slug":"average-profit-vs-super-profit","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/average-profit-vs-super-profit\/","title":{"rendered":"AVERAGE PROFIT VS. SUPER PROFIT"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/average-profit-vs-super-profit\/#AVERAGE_PROFIT\" title=\"AVERAGE PROFIT\">AVERAGE PROFIT<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/average-profit-vs-super-profit\/#SUPER_PROFIT\" title=\"SUPER PROFIT\">SUPER PROFIT<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/commerceiets.com\/average-profit-vs-super-profit\/#AVERAGE_PROFIT_VS_SUPER_PROFIT\" title=\"AVERAGE PROFIT VS. SUPER PROFIT\">AVERAGE PROFIT VS. SUPER PROFIT<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"AVERAGE_PROFIT\"><\/span>AVERAGE PROFIT<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Average profit is the average of all the agreed profits of past years. It is calculated by dividing the total profits by the number of years. This is the most common method of calculating <a href=\"https:\/\/commerceiets.com\/goodwill\/\">goodwill.<\/a><\/p>\n\n\n\n<p class=\"has-background has-pale-cyan-blue-background-color\"><strong>AVERAGE PROFITS= Total Profits\/ Number of years<\/strong><\/p>\n\n\n\n<p>A buyer always wants to estimate the future profits of the\nbusiness. Future profits always depend upon the performance of the business in\nthe past. Past profits indicate as to what profits are likely to accrue in the\nfuture. Therefore, the past profits are averaged.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"SUPER_PROFIT\"><\/span>SUPER PROFIT<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Super Profit is the excess of average profit over the normal profit. It shows the exceptional ability of the firm to earn more profits in comparison to other firms in the industry. It is calculated by deducting the normal profits from average profits.<\/p>\n\n\n\n<p class=\"has-background has-pale-cyan-blue-background-color\">SUPER PROFITS= Actual Profits- Normal Profits<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"AVERAGE_PROFIT_VS_SUPER_PROFIT\"><\/span>AVERAGE PROFIT VS. SUPER PROFIT<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-subtle-light-gray-background-color has-background\"><tbody><tr><td>   <strong>BASIS OF DIFFERENCE   <\/strong><\/td><td>   <strong>AVERAGE PROFIT   <\/strong><\/td><td>  <strong> SUPER PROFIT   <\/strong><\/td><\/tr><tr><td>   <strong>MEANING   <\/strong><\/td><td>\n  It is the average of the profits of past agreed years.\n  <\/td><td>\n  It is the excess of average profit over normal profit.\n  <\/td><\/tr><tr><td>  <strong> NORMAL RATE OF RETURN<\/strong>   <\/td><td>\n  Normal rate of return is not relevant in the calculation of average\n  profit.\n  <\/td><td>\n  Normal rate of return is considered while calculating the super\n  profit.\n  <\/td><\/tr><tr><td><strong>   AVERAGE CAPITAL EMPLOYED   <\/strong><\/td><td>\n  Average capital employed is not considered while calculating average\n  profit.\n  <\/td><td>\n  Average capital employed is taken into account while calculating the\n  super profit.\n  <\/td><\/tr><tr><td>   <strong>RELEVANCE FOR VALUING GOODWILL   <\/strong><\/td><td>\n  Average profit is relevant for Average Profit Method, Super Profit\n  Method and Capitalization method of valuation of goodwill.\n  <\/td><td>\n  Super profit is relevant for Super Profit Method, and Capitalization\n  of Super Profit method of valuation of goodwill.\n  <\/td><\/tr><tr><td>   <strong>NORMAL PROFITS   <\/strong><\/td><td>\n  It needs not to be calculated.\n  <\/td><td>\n  It is always required.\n  <\/td><\/tr><tr><td>   <strong>PROFIT FOR NUMBER OF YEARS   <\/strong><\/td><td>\n  Profits for more than one year is required to get average profit\n  <\/td><td>\n  Only one year actual profit is required.\n  <\/td><\/tr><tr><td>   <strong>FORMULA   <\/strong><\/td><td>\n  Total Profit\/ Number of Years\n  <\/td><td>\n  Actual Profits- Normal Profits\n  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<figure class=\"wp-block-embed-facebook wp-block-embed\"><div class=\"wp-block-embed__wrapper\">\nhttps:\/\/www.facebook.com\/commerceiets\/\n<\/div><\/figure>\n\n\n\n<p>JOIN THE CHANNEL ON TELEGRAM<\/p>\n\n\n\n<p><a href=\"https:\/\/t.me\/commerceiets\" target=\"_blank\">https:\/\/t.me\/commerceiets<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>AVERAGE PROFIT Average profit is the average of all the agreed profits of past years. It is calculated by dividing the total profits by the number of years. This is the most common method of calculating goodwill. AVERAGE PROFITS= Total Profits\/ Number of years A buyer always wants to estimate the future profits of the&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/average-profit-vs-super-profit\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;AVERAGE PROFIT VS. SUPER PROFIT&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":1262,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19,21],"tags":[22,23],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/1257"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=1257"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/1257\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/1262"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=1257"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=1257"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=1257"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}