The Importance of Goodwill in Business Analysis

Businesses logically are worth far more than net tangible assets when they can be expected to produce earnings on such assets. The capitalized value of this excess return is economic goodwill. C's was earning about $2 million after tax of the time, and C's earned a steam conservatively representative of future earning power in constant $19.72. In 1983, Berkshire acquired the rest of blue chip in a merger that required purchase accounting.