It is possible to compare different companies selling the same products by looking at their Gross Profit Percentages. The Gross Profit Percentage is a way of measuring the profitability of a business, but before looking at its expenses (overheads). But by 2012 the brand value was worthless and the company disappeared! 10. In 1997 Kodak employed 145,000 people and had a company value of $31 billion. Goodwill is a real asset for us because it represents the ability of those companies to make a good profit.Ī great example of a global brand which has disappeared over time is Kodak. The goodwill showing in our financial statements is the difference between what we paid for the three companies we bought, and the value of their tangible assets. The difference between £1m and £100,000 (which is £900,000) would be the goodwill in the transaction. The £1m value would be so high because the firm could be very profitable. For instance, a firm of Estate Agents which has only £100,000 of assets (such as computers and furniture) could be sold for £1m. Goodwill is an intangible asset and represents the value of a business which does not take the form of physical or tangible assets. We paid £1 million for the business, but the cost of the machinery, vehicles and computers is only £100,000. Sometimes it is just shortened to Intangibles. They are Goodwill, Patents, Trademarks and Brand Value. We are going to have a look at 4 of these assets straight after this point. But sometimes assets exist which don’t have a physical existence. When a company has an asset that you can physically touch, such as a car or a machine, these assets are tangible (which means you can touch them). The total assets of the company are £350,000 and the liabilities are £225,000, so the Net Worth is £125,000. The total at the bottom of a Balance Sheet is often referred to as (called) the Net Worth of the company. Net Worth means the total value of all the assets of a business or company, minus (less) all the liabilities that it owes. Our investors will be so pleased with the high Return on Investment. We didn’t pay much for this company, but this year it has made a huge profit. ![]() You see this calculation used a lot in reports about the Stock Market. ![]() ![]() If you pay a lot of money for a company, then you want it to make a lot of profit. They are calculations showing how much profit is being made by a company in comparison to the cost of the investment. Return on Investment and Return on Capital Employed (ROI & ROCE) are very similar. Return on Investment / Return on Capital Employed (ROI / ROCE) ![]() The firm has borrowed a lot more money this year, so our gearing will be a lot higher than last year in the report from the analysts. Very often you will see a calculation of this concept, which is called a gearing ratio. If the company is ungeared then it is not borrowing anything. If a company has high gearing then it is borrowing a lot, and low gearing means that it is borrowing very little. Gearing is a measure of how much money a company is borrowing from the banks. Does the report give the EV for Apex Training Ltd? 2. Enterprise Value (EV) is a calculation of the total value of a business, firm or company.
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