If the amount of super profit is negative what does it indicate
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Answered by
11
If the amount of super profit is negative,it indicates that there is no or negative goodwill of that business. it also shows that the company has very low value in market.
Answered by
1
It shows that company doesn't have goodwill .
Explanation: super profit is calculated as follows:
super profit = maintainable average profits- normal profits.
it indicates that company is earning more than the normal earnings because of its goodwill or good name in the market, so the additional profit is coming because of the goodwill.
so according to your question the company's super profits are negative that clearly shows that company has no goodwill and even its earning less than the normal market rates , because of this its super profits are negative .
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