Finance Numericals

Valuation of Goodwill by Super profit method: Goodwill = super profit*number of years purchase Super profit = Average profit – Normal profit Normal profit = Capital employed* Normal rate of return Example:   Find out the goodwill of a company with the help of given information: Number of years purchase 3 Capital employed Rs. 2,60,000 Normal rate of return 10% Profit/Loss:   2008 80,650 2009 78,000 2010 42,500 2011 90,000 2012 1,20,000 Solution: Normal profit = (2, 60,000*10/100) = Rs. 26,000 Average profit = (80,650 + 78,000 + 42,500 + 90,000 + 1, 20,000) / 5 = (4, 11,150/5) = Rs.   82,230 Super profit = Rs. (82,230 – 26,000) = Rs. 56,230 Goodwill = 56,230*3 = Rs. 1, 68,690 Example:   Find out the goodwill of the ABC Company if the number of year pur