In accounting, goodwill is an interesting term. When a company acquires another company and pays a premium to the market price, the premium paid is recorded as 'goodwill' in the acquirer's balance sheet under 'assets'. If the brand value of a company goes down, it has to write off part of goodwill. When this write-off happens, in order to balance assets and liabilities, the firm also has to reduce its net worth by the same amount.
In the companies listed below, goodwill forms a major part of their assets and 50 per cent of their net worth. If these companies write-off their goodwill, their net worth may take a severe hit. This can in turn increase their debt-to-equity ratios, thus putting their financial health in jeopardy.
Given that a major part of their assets is goodwill, these companies will not even have the support of assets to meet their debt obligations.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
