Growing bigger by the minute right now !

Take, for example, the idea of "goodwill". It's an accounting entry that allows companies to book, as an asset, the difference between the "book value" of a company it bought and the price it actually paid for that company.

In other words, if a company "overpays" to buy one of its competitors, it matters not a whit, because that "goodwill" sits on its balance sheet. Sadly, we can't do the same with the Ford Mustang we saw on ebay last week. (Try paying $50,000 for a classic car worth $30,000 and then asking your bank manager for a loan against the difference).

Would it surprise you to know that the size of that mysterious "goodwill" is more than the annual GDP of the United Kingdom?

Global stock markets are worth around $57tn. If normal estimates of goodwill are accurate (which itself is a bit of an issue) we can assume around $1.8tn of that value is, at best, nothing more than a guess (after all, how does one define "overpay")?


[link to www.ibtimes.co.uk]