Effect of factors on company’s goodwill

The super profit method (SPM) is a valuation technique used to estimate the value of goodwill. It is commonly used in the context of valuing small businesses or professional practices. The present research aims to assess the impact of super profit, capital employed, nominal profit, and nominal rate on goodwill values. To find which parameter impacts more on the response variable, the design of the experiment (DOE) is considered. To conduct the experiments and optimize the factors for goodwill values, the study utilizes the design of experiment methodology. Notably, this research is the first to employ the DOE to identify the optimal combination of input factors. To explore the effects of input factors, the Taguchi method L9 DOE, analysis of variance (ANOVA), regression coefficient, and analysis of mean (ANOM) are used, and the analysis is carried out using MINITAB 18 software. ANOM allows us to discover the most effective combinations of variables across different levels, specifically focusing on their impact on a desired output. It also helps us establish the rank of input factors based on their influence on the respective outputs. The regression analysis can be used by the traders to check the behavior of factors that impact the goodwill valuation. ANOVA is used to gauge the percentage contribution of these factors to the variation in goodwill value. The results indicate that, for a specific dataset, the factors affecting goodwill value are ranked in the following order: purchase period (N), average profit (AP), nominal rate (r), and capital employed (CA). Finally, some other factors have also been studied that impact the goodwill of a firm during this study.