Factors affecting the value of goodwill

1. FACTORS AFFECTING THE VALUE OF GOODWILL

2. 1. FAVOURBLE LOCATION If the business is located in a prominent locality having heavy customer traffic, the goodwill tends to be high

3. 2.NATURE OF BUSINESS A firm produced goods having stable demand is able to earn more profits and it helps to increase goodwill

4. 3.EFFICIENCY OFMANAGEMENT A well managed concern enjoys the advantages of high productivity and profitability.

5. 4. TIME FACTOR A business concern running profitably for a long period will have more value of reputation than a business which has been recently established.

6. 5.CAPITAL REQUIEMENTS A business which requires lesser amount of capital will have more goodwill than one with high capital requirement.

7. 6.MARKET CONDITION Monopoly conditions or limited competition enables a business concern to earn high profits and enjoy more goodwill.

8. 7.SPECIAL ADVANTAGES A firm with special advantages like import licences , assured supply of electricity at low rates, etc ., enjoys higher value of goodwill.

9. ON ADMISSION OF A PARTNER ON RETIREMENT OF A PARTNER ON DEATH OF A PARTNER CHANGE IN PROFIT SHARING RATIO AMALGAMATION OF TWO OR MORE FIRM DISSOLUTION NEED FOR VALUATION OF GOODWILL