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Goodwill factor Investment return

Factor “Investment return” is 1 out of 8 factors that GMC simulator uses to calculate the company's goodwill value. Below are presented parameters from decision and management report that are most correlated with goodwill factor “Investment return” when calculating the company's goodwill value.

Parameters include direct and inverse correlation:

  1. Profit (loss) before taxes: from -0.76

  2. Taxes: -0.59

 

It can be concluded that the key factor is profit (loss) before taxes, but not the absolute value of profit (loss) before taxes. The key factor is profit (loss) before taxes based per share, i.e. according to the formula:

Profit (loss) before taxes / shareholders' equity

 

Diagram below shows the dependence of the goodwill factor “Investment return” from the profit (loss) per share for the 14C1 scenario in 1 period.

 

Trend can be clearly defined. Straightforward relationship between goodwill factor and our metric is found, which indicates absence of the influence of competing companies in the group.

 

Hints:

  1. Goodwill factor “Investment return” can vary between 0,894 - 1,118.

  2. Value of the goodwill factor “Investment return” does not depend on value in previous period or on decisions of competitors in the group.

  3. Optimal strategy in the last period is to get the greatest profit of the company per 1 share for the maximum goodwill.