What is the formula for evaluating a business' goodwill?

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1208173

2026-03-30 21:30

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Goodwill (by Average profit Method) = Average profit X No.of years purchase

Goodwill(by Super profit method) Normal profit = Average capital employed X Normal rate of return / 100

Super profit = Actual profit- Normal profit

Goodwill = Super profit x Number of years purchase (usually specified in question)

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