Goodwill
Short definition
Goodwill is the excess of purchase price over the fair value of identifiable net assets. Cash left at close; keeping it as an asset does not mean value was kept.
Detailed explanation
Under IFRS it is not amortised; it is tested for impairment. If synergy fails or WACC rises, it is written down; the cash left at close, not on impairment day.
Covenants and leverage that use goodwill-inflated equity overstate the cap. In valuation, goodwill is the scar of the premium paid, not future cash.
Why it matters for the CFO
High goodwill means a dear price or thin identifiable assets. Impairment hits profit and equity in one go.
How it is calculated
Şerefiye ≈ ödenen özkaynak bedeli − net tanımlanabilir varlıkların gerçeğe uygun değeri
Variables in the formula
- GW: goodwill
How to read it
Goodwill / EV is the size of the premium. Sector and brand do not justify it; cash ROIC does.
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.