One thing I follow on my spreadsheets is relationship of Intangible Assets and Goodwill compared to the stock market cap. If the total of Intangible Assets and Goodwill is approaching or over 100% of the market capitalization of a stock the market could be tell you that investors are not valuing these special assets.
Often when Goodwill is at or over 100% of the market cap of a stock is a signal that a company may have to write-off part or all of the Goodwill on its books. This can occur also with Intangible Assets.
Intangible Assets are assets that are not physical in nature, but can provide a stream of revenue. Intangible Assets are such things as patents, trademarks, copyrights, business methodologies or brand recognition. Such things can be valuable for a firm. The concept of Tangible Assets are talked about on Investopedia.
Goodwill is a type of Intangible Asset. This asset occurs when one company buys another company and pays more than the fair market value of its net assets. Investopedia also has an entry on this subject here. Also the site Investing Answers gives examples of how Goodwill is handled in accounting.
I just like to keep an eye on these types of assets because if they get too high in relationship to a stock market capitalization, this can be pointing to a problem that the market does not think that they are as valuable as the company says on their balance sheet.
On my other blog I am today writing about Russel Metals Inc. (TSX-RUS, OTC-RUSMF) ... continue...
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