goodwill

  

Definition

Assumed value of the attractive force that generates sales revenue in a business, and adds value to its assets. Goodwill is an intangible but saleable asset, almost indestructible except by indiscretion. It is built painstakingly over the years generally with (1) heavy and continuous expenditure in promotion, (2) creation and maintenance of durable customer and supplier relationships, (3) high quality of goods and services, and (4) high quality and conduct of management and employees. Goodwill includes the worth of corporate identity, and is enhanced by corporate image and a proper location. Its value is not recognized in account books but is realized when the business is sold, and is reflected in the firm's selling price by the amount in excess over the firm's net worth. In well established firms, goodwill may be worth many times the worth of its physical assets. GAAP require the firm's purchaser to write off (amortize) the amount paid as goodwill over a period (usually 10 to 30 years) for financial reporting purposes.

Use goodwill in a sentence

  • Your goodwill will someday return to you so perhaps you should be good to others and do unto them as you would have them do unto you

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  • The company cares about goodwill so they honored the exchange with out a receipt which made me feel really great and thankful.

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  • The company's new owners were pleased with its high level of goodwill, as it would be easier to keep a customer's loyalty than to earn it.

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