1: goodwill definition
2: how goodwill works
3: goodwill vs trademark
4: example of goodwill
Opening information:
Goodwill words breaks by two things good and will, good means matter which happen by fine benefiting something, will means statement which say that activities would be done in future.
Goodwill means good things which benefits in future, so now let’s have a look what is a Goodwill, how the good will works in the stock market among the public Corporations, and what is the difference between the goodwill and trademark, finally one clear example about the Goodwill.
1: Goodwill definition
When comes to Good Will it’s show what benefits someone in what aligned way, if the one person or institution or Corporations works benefits good in life, then such things is a good things which that good things are known as good will.
To clarify more, In my city their is a person called Mr.Jakiu, he is a great electrician, the huge advantage of this electrician is high amount of customer base, Mr.jakiu had great reputation among his Consumer who use his services.
Because he is a electrician who provides the personal service for nearly about the 9 years, which made the customer believe and had huge trust in the Mr.jakiu works when compared to any other new electrician.
Whenever his named was ask by anyone for his service, his past service of reputation was also speak by the loyal customer.
Therefore more than his personal electrician service, his past reputation of his named works created a great asset for his future growth.
So his customer base started to grow consistently 12 percent each year without any single amount of marketing by himself or by his own spending of earned money.
Here the electrician reputation is considered intangible assets as goodwill, because anyone who got into the market using his recommendation, which also had same worth and reputation like a jakiu.
Like service reputation anything which are used to benefits the purpose of the business in huge level like copyright, patent extra which are also known to be a Goodwill.
So let’s dive into know how the goodwill works in the stock market for all the Corporate Industries in public market.
2: how goodwill works
The goodwill doesn’t represent any specific things or object as a good will, instead it’s idea of concept which shows the assets which are non touchable physically by people’s but with some value.
Which that non touchable assets would had some value, where that value would be derived from the goodness of such business.
The goodness would be nothing is as seen, but world investing website and Investors say the brand reputation, stable earning, honest costumers, patent, copyright, trade mark extra…
Non of the goodwill would be considered as Current assets, because the good will are never turnable into cash within a short or long term until one business merge or aquire by other Industries.
For the reason the good will are remaining value which calculated by the after the subtraction of the assets with liabilities and minus that with market purchased price.
Therefore any amount is how much such business willing or able to got paid in the market place above than it’s normal or fair value.
Which that value of amount above than a fair price for one business are trapped as good will, that’s why most of Investors didn’t take the good will as a serious assets.
At the same time instead of well value for goodwill by acquiring and merge by other organizations but when one organization got bankrupt, then such goodwill had chance would turn into negative value or amount. This leads to decrease in the total asset side in the balance sheet of one company.
Never the good will value or amount would be stable like a other physical asset in the business, so good will are the assets which are not touchable but it’s considered as a assets.
Most of the people’s confuse the Goodwill and trade mark, so let’s dive into know the key difference in it anyway.
3: goodwill vs trademark
The difference between the goodwill and trademark are, goodwill represent the all the things which are highly add value of the business, if one things doesn’t add value to the such business, then it’s doesn’t known to be goodwill.
Next the trademark is the mark of logo of one company, which are used while doing a buying and selling activities, it’s also consider as add value to the such business.
So the key difference between the goodwill and trademark are trade mark are part of the goodwill, to make you more clear about the goodwill let’s seen into one clear example anyway.
4: example of goodwill
Say the company Had a patent for their new innovation and great copyright things already founded product.
Here the patent is and copyright are separated things, which this all things are known to be as goodwill.