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Assessment Of The Economic Activity Of The Entity Through The Prism Of Goodwill And Badwill Tools

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  • Iulita BIRCA

    (Stefan cel Mare University of Suceava, 720229, Romania)

Abstract

Estimating the value of an economic entity is one of the most difficult financial problems. In this context, knowing the overall value of an entity is useful for buyers, investors, and owners. The most relevant indicator in this case is the value of Goodwill (which determines the sound management and performance of the entity) and Badwill (the indicator of the entity's unfavorable situation, respectively). The purpose of the present research consists in the fundamental analysis of the theoretical aspects with reference to the evaluation of the economic entity in terms of the Goodwill and Badwill instruments. The objectives of the research include: identifying the notions of Goodwill (positive and negative), presented by the scientists in the field and the specialized literature; defining the concepts and aspects of the Goodwill and Badwill instruments, identifying the methods of evaluating the economic entity with the help of the Goodwill tool, as well as establishing its place and role in the economic activity of the entity. The results obtained can serve as recommendations for managers in economic entities to understand and accept the need to estimate the overall value of the economic entity not only in the case of purchase-sale, but also to take remedial action in situations of uncertainty and risk.

Suggested Citation

  • Iulita BIRCA, 2022. "Assessment Of The Economic Activity Of The Entity Through The Prism Of Goodwill And Badwill Tools," European Journal of Accounting, Finance & Business, "Stefan cel Mare" University of Suceava, Romania - Faculty of Economics and Public Administration, West University of Timisoara, Romania - Faculty of Economics and Business Administration, vol. 10(1), pages 57-66, February.
    • Handle: RePEc:scm:ejafbu:v:10:y:2022:i:1:p:57-66
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