What is the meaning of goodwill? How is it calculated?
A company that provides factors like a quality product, good services, and uniqueness and these factors helps to create good names and good reputation of the company in the minds of customers, bankers, and suppliers, etc when we try to value the good name and reputation of the business in terms of money then it is known as Goodwill.
Goodwill = P − (A+L)
A = Fair market value of assets
L = Fair market value of liabilities
P = Purchase rate for the targeted company