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Goodwill in invested capital within income valuation of a business
[Goodwill v investovaném kapitálu při výnosovém oceňování podniku]

Author

Listed:
  • Václav Adam
  • Miloš Mařík
  • Pavla Maříková

Abstract

The aim of the article is to analyze the basic variants of dealing with accounting goodwill in invested capital and their impact on the income valuation of the company. On the real case of Pivovary Staropramen, s.r.o., the article demonstrates three ways to work with goodwill - keep it in the invested capital in net value, report it at the original gross value, or completely remove goodwill from the invested capital. The article points out the risk of an erroneous conclusion regarding the going concern assumption of the valued company if the high value of accounting goodwill in the invested capital causes a decrease in profitability below the cost of capital. The second risk is the calculation of disproportionately high and duplicate investments in goodwill in continuing value. The main recommendation of the article is to keep goodwill in the invested capital when looking for investment value and when analyzing the efficiency of the company's management, but to remove it when looking for the market or equitable value of the company.

Suggested Citation

  • Václav Adam & Miloš Mařík & Pavla Maříková, 2025. "Goodwill in invested capital within income valuation of a business [Goodwill v investovaném kapitálu při výnosovém oceňování podniku]," Oceňování, Prague University of Economics and Business, vol. 18(2), pages 3-22.
    • Handle: RePEc:prg:jnloce:v:18:y:2025:i:2:id:301:p:3-22
    DOI: 10.18267/j.ocenovani.301
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    Keywords

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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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