Goodwill Valuation Enhancement through Capitalization Method and Statistical Impact Analysis

Shariq Mohammed, Amir Ahmad Dar (), Mohammad Shahfaraz Khan, Imran Azad, Gopu Jayaraman and Olayan Albalawi
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Shariq Mohammed: Department of Accounting, College of Commerce and Business Administration, Dhofar University, Salalah 211, Oman
Amir Ahmad Dar: School of Chemical Engineering and Physical Sciences, Lovely Professional University, Phagwara 144411, Punjab, India
Mohammad Shahfaraz Khan: College of Economics and Business Administration, University of Technology and Applied Sciences, Salalah 211, Oman
Imran Azad: College of Economics and Business Administration, University of Technology and Applied Sciences, Salalah 211, Oman
Gopu Jayaraman: College of Economics and Business Administration, University of Technology and Applied Sciences, Salalah 211, Oman
Olayan Albalawi: Department of Statistics, Faculty of Science, University of Tabuk, Tabuk 71491, Saudi Arabia

JRFM, 2024, vol. 17, issue 6, 1-12

Abstract: The valuation of Goodwill (GW) has remained one of the several critical issues in financial analysis. This aspect is particularly important for mergers and acquisitions due to the significance of intangible assets. This study delves into the capitalization method of super profit (CMSP), a prominent technique for GW valuation, enhanced by the integration of statistical tools. Assessing a company’s excess profits over its average return on tangible assets is part of the CMSP. Finding the variables that have a significant impact on GW valuation, such as average profit, capital employed, and rate of return, is the main goal of this research. These issues are thoroughly investigated through statistical analysis to give stakeholders useful information for well-informed decision-making. Additionally, the study seeks to identify the external elements influencing this process as well as the internal aspects influencing GW valuation. Regression analysis, correlation matrices, response analysis and ANOVA are used to improve GW assessment and comprehension of the complex relationships between different factors.

Keywords: GW; capital employed; average profit; CMSP; ANOVA; regression (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
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