Abstract
Research background: Both the creation and quantification of goodwill are interdisciplinary issues affecting accounting, economics, law, marketing, sociology and human resources. In both economic theory and practice, goodwill is the difference between the market and the book value of an enterprise. Purpose of the article: With the acceleration of globalization, the economic aspects of which are the logical consequence of the increasing interdependence of individual economies towards the end of the second half of the 20th century, the importance of building and managing goodwill as a competitive advantage through business activities and internationally is increasing. These facts should be more highlighted and stronger in the sector of non-profit organizations. Because of their mission, vision and character of their business. The main aim of the paper is to capture the value of goodwill in the sector of non-profit organizations in the Slovak Republic. Methods: As a testing data will be used 72 non-profit organizations from Slovak Republic. In this sample will be quantified the value of their goodwill by residual income methods. Residual income assumes the value of goodwill as a difference between net income and the product of the cost of equity and the book value of equity. Findings & Value added: Paper findings will bring the view on the possibility of measuring goodwill in the sector of non-profit organizations under the conditions of globalizations with the emphasis on the application of residual income method in the case of Slovak Republic.
Highlights
Goodwill has often defined as company reputation, image, good name, prestige, as well as the brand
Results of residual income method in the 72 non-profit organizations represented real data, results of economic value added in the 72 non-profit organizations represented model data
Economic value added was chosen as another method which can be used for calculation of the value of company and it can be used as a comparison method to residual income method
Summary
Goodwill has often defined as company reputation, image, good name, prestige, as well as the brand. It is reflected in the relationship between company and other market participants and company perception in the eyes of its customers. [1] Traditionally, we distinguish between two types of goodwill: namely, purchased goodwill and internally generated goodwill. Purchased goodwill is the difference between the value paid for an company as a going concern and the sum of its assets less the sum of its liabilities, each item of which has been separately identified and valued. Generated goodwill will be the main subject of interest in the paper, hereinafter referred as to “Goodwill”. Its suppliers are more willing to cooperate, as well as its investors are more tolerant and willing to finance business development. [1,2,3]
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