What is goodwill in the stock market? How did it come into being?

Goodwill usually refers to the value that an enterprise can obtain higher than the normal return on investment under the same conditions. This is due to the geographical advantages of the enterprise, or to various reasons such as high operating efficiency, long history and high personnel quality. Compared with peer joint-stock enterprises, it can obtain excess profits. When a company is acquired, it will generate value when it can bring potential value or expected income to the acquirer. The greater the value and income, the higher the goodwill, the smaller the value and income, and the lower the goodwill.

Goodwill in the stock market? Premium acquisition? It produces assets that a listed company pays more than the value of the enterprise itself when it buys another enterprise. Goodwill is an intangible asset, which cannot be seen or touched. Goodwill is an integral part of the overall value of the enterprise, and it is also the difference between the investment cost of the purchased enterprise and the fair value of the net assets of the acquired enterprise. When investors buy a company, the goodwill of the company depends on whether it can bring benefits to your company in the future, or whether it can be far higher than the money you buy now when it is sold in the future. If there is, it means that the company has goodwill value, if not, it means that there is no goodwill value.

Goodwill will be displayed in some stock trading software, even in some annual reports. The value of goodwill can be seen in the non-current assets of the balance sheet. There are many reasons for goodwill, generally from the good image of the enterprise and the good impression of customers on the enterprise, which makes the enterprise have a good reputation, favorable operating position and good management in the industry.

When judging whether the company's goodwill value is reasonable, the following methods are mainly adopted:

First, judging by calculating the two indicators of goodwill/net assets and goodwill/net profit, it is generally believed that the ratio of goodwill/net assets exceeds 30% or the ratio of goodwill/net profit exceeds 2 times, so it is necessary to make such investments cautiously;

Secondly, we can analyze the past and future profitability of the acquired company by analyzing its past and future profitability and comparing its comprehensive industries. You can also refer to its average profitability in the past 3-5 years, then compare it with the average level in the industry, calculate a future profit forecast, and finally calculate whether it is worth the goodwill.

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