Question

Write any two factors affecting Goodwill.

Hint:

Goodwill is not just about financial factors; market reputation and customer loyalty can significantly increase a business's value.

Answer 1

Step 1: Understanding Goodwill.
Goodwill represents the value of a business beyond its tangible assets. Several factors influence the value of goodwill in a business.
Step 2: Two key factors affecting Goodwill:
1. Profitability: A business that generates consistent and high profits typically has higher goodwill, as it indicates stability and future earning potential. 2. Reputation and Customer Base: The goodwill of a business is greatly affected by its reputation in the market, the loyalty of customers, and the brand value it holds in the industry.