Question

What are the factors affecting goodwill?

विकल्प

• Nature of business

• Location

• Efficiency of management

• All of the above

Answer 1

All of the above

Explanation:

The following are the primary factors that influence the value of goodwill:

Nature of business: A company that provides high-value-added items or has a consistent demand might earn more money and hence gain more goodwill.

Location: Goodwill is likely to be high if the business is centrally located or in a well-trafficked area.

The efficiency of management: High productivity and cost efficiency are normally advantages of a well-managed company. As a result, profits will rise, and the value of goodwill will rise as well.

Market situation: The monopoly or restricted competition allows the company to produce large profits, resulting in a higher goodwill value.

Special advantages: The firm with specific advantages such as import licenses, low-cost and reliable electricity, long-term contracts for material supply, well-known collaborators, patents, trademarks, and so on, has a higher goodwill value.