Definitions [1]
Definition: Goodwill
- ''The term goodwill is generally used to denote the benefit arising from connections and reputation.'' - Lord Lindley
- ''Goodwill is nothing more than the probability that the old customers will resort to the old place.'' - Lord Eldon
- ''Goodwill may be said to be that element arising from the reputation, connections or other advantages possessed by a business which enables it to earn greater profits than the return normally to be expected on the capital represented by the net tangible assets employed in the business.'' - Spicer and Pegler
- "When a man pays for goodwill, he pays for something which places him in the position of being able to earn more than he would be able to do by his own unaided efforts." - Dicksee
Key Points
Key Points: Goodwill
- Meaning: Goodwill is the reputation of a business that helps it earn more than normal profits.
- Nature: It's an intangible but valuable asset, sold only with the full business. Only purchased goodwill is recorded.
- Features: Attracts customers, earns extra profits, value keeps changing, can't be sold alone, and hard to measure.
- When Valued: On partner admission, retirement, change in profit-sharing, sale, or merger.
- Factors Affecting: Management, location, age, profit trend, quality, licenses, and market conditions.
