Effect of factors on company’s goodwill

Amir Ahmad Dar (), Akshat Jain, Mehak Malhotra, Shahbaz Afzal and Mohammad Shahfaraz Khan
Additional contact information
Amir Ahmad Dar: Lovely Professional University
Akshat Jain: Lovely Professional University
Mehak Malhotra: Lovely Professional University
Shahbaz Afzal: Chitkara University
Mohammad Shahfaraz Khan: University of Technology and Applied Sciences

Journal of Global Entrepreneurship Research, 2023, vol. 13, issue 1, 1-10

Abstract: Abstract The super profit method (SPM) is a valuation technique used to estimate the value of goodwill. It is commonly used in the context of valuing small businesses or professional practices. The present research aims to assess the impact of super profit, capital employed, nominal profit, and nominal rate on goodwill values. To find which parameter impacts more on the response variable, the design of the experiment (DOE) is considered. To conduct the experiments and optimize the factors for goodwill values, the study utilizes the design of experiment methodology. Notably, this research is the first to employ the DOE to identify the optimal combination of input factors. To explore the effects of input factors, the Taguchi method L9 DOE, analysis of variance (ANOVA), regression coefficient, and analysis of mean (ANOM) are used, and the analysis is carried out using MINITAB 18 software. ANOM allows us to discover the most effective combinations of variables across different levels, specifically focusing on their impact on a desired output. It also helps us establish the rank of input factors based on their influence on the respective outputs. The regression analysis can be used by the traders to check the behavior of factors that impact the goodwill valuation. ANOVA is used to gauge the percentage contribution of these factors to the variation in goodwill value. The results indicate that, for a specific dataset, the factors affecting goodwill value are ranked in the following order: purchase period (N), average profit (AP), nominal rate (r), and capital employed (CA). Finally, some other factors have also been studied that impact the goodwill of a firm during this study.

Keywords: Goodwill; Valuation; Super profit method; DOE; Climate change (search for similar items in EconPapers)
JEL-codes: C9 G22 G32 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s40497-023-00361-5 Abstract (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jglont:v:13:y:2023:i:1:d:10.1007_s40497-023-00361-5

Ordering information: This journal article can be ordered from
http://www.springer. ... urship/journal/40497

DOI: 10.1007/s40497-023-00361-5

Access Statistics for this article

Journal of Global Entrepreneurship Research is currently edited by Nezameddin Faghih

More articles in Journal of Global Entrepreneurship Research from Springer, UNESCO Chair in Entrepreneurship
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().