Goodwill: It is an intangible asset . If a company pays more than the book value to purchase the company it is due to that goodwill of the company. The company earns goodwill by satisfying the needs of a customer, solving customer grievances in fixed time, and provide services and product in reasonable prices etc. but all of this not happen in few time. Company earn super profit which means it earns more than normal profit due to its goodwill in a market. Newly established company does not earn goodwill because people don’t know about the company and they can’t trust in new company so easily in comparison to old and well established company who work in a market more years in comparison to new one. With the help of goodwill company gets well known in a market, easily gets the client for the company, profit earns more than normal, easily compete with the competitors. So, it is necessary to ascertain the value of a company’s goodwill. If there is any acquisition, partnership and m
This blog is totally for education purpose which helps to solve finance related numerical like time value of money, annuity ,perpetuity, technique of capital budgeting, cost of capital, working capital management and hire purchase etc.