1. Purchasing A Small Business
... any profitable company. The Excess Earnings method "assumes that a business is worth the market value of its tangible assets, plus a premium for 'goodwill' if the earnings are high enough."(Horn, 51) Another area that must be calculated is goodwill. "Goodwill is not an operating cost and cannot be depreciated. It does not provide you with tax relief."(Smorenburg, 114) Since there is no ... record of the worth of goodwill, it can be fairly difficult to determine an accurate buying price. Usually the seller will set the price based on their knowledge of the company. The set price, however...
- Word Count: 2342
- Approx Pages: 9
- Grade Level: High School