...contribution is rising. In service sector nearly 22% of the population of the nation is contributing around 55% of GDP. The reason for high productivity can be attributed to only intangibility. The financial statements of the service sector enterprises do not depict the intangibles – because of difficulty in identification, measurement and valuation. The growth of the Service Sector may be slowed down if the service firms which are mostly knowledge driven are not growing and the two major obstacles in the growth of knowledge driven firms are (a) Finance and (b) Coverage of risk. Since the methodologies have not been developed for valuation of the intellectual properties, there are no reported resources on the basis of which sources for raising the resources can be approached and also the assets can be insured. While addressing a gathering of students, an eminent speaker has said “Help the country by investing in yourself.” He emphasised that by investing in self one can create intangibles (intellectual property) which can bring tangible development of the nation. But question is how to measure the intangible? The measurement of intellectual...
Words: 1221 - Pages: 5
...Corporation - Business Structure and Valuation. Executive Summary This research project summarizes the business of Oracle Corporation (Oracle), the company’s key competitive advantage factors and the valuation of the company. In this summary, the corporate structure of Oracle, the company’s business and competitive advantage and the valuation of the company are discussed. Oracle is involved in the business of providing enterprise resource software to its customers and clients. This paper is structured into 3 sections. • Section 1 – This section discusses Oracle’s business of providing enterprise resource software. • Section 2 – This section discusses Oracle’s key competitive advantages within its industry. • Section 3 – This section describes the valuation approaches and methods utilized in arriving at a valuation for Oracle Corporation. Table of Contents Section 1 – The Need for Business Valuation. -1- Section 2 – Scope of SSVS1 -2- Section 3 – Valuation Approaches and Methods -3- Section 4 – The Valuation Report -4- Conclusion -4- Bibliography -5- Section 1 The Need for Business Valuation Noting the number of transactions (mergers, acquisitions, initial public offerings (IPOs), etc.), litigations (contractual disputes, bankruptcies, intellectual property right disputes, etc), and engagements...
Words: 1370 - Pages: 6
...CAPITAL TABLE OF CONTENT 1. INTRODUCTION 1 2. INTELLECTUAL CAPITAL 2 2.1 Definition of Intellectual Capital 2 2.2Characteristics of Intellectual Capital 2 2.3 Components of intellectual capital 3 2.3.1 Human Capital 3 2.3.2 Structural Capital 3 2.3.3 Relational External Capital 5 3. MANAGING INTELLECTUAL CAPITAL 7 3.1 Tacit knowledge 8 3.2 Explicit knowledge 8 4. MEASURING INTELLECTUAL CAPITAL 12 4.1 Why should Intellectual Capital be measured? 12 4.2 Why is intellectual capitalso hard to measure? 12 4.3 Methods for measuring intellectual capital 13 5. INTELLECTUAL CAPITAL REPORTING FRAMEWORKS 14 5.1 Balanced Scorecard 14 5.2 Intangible Assets Monitor (IAM) 14 5.3 Skandia Value Scheme (SVS) 15 5.4 Challenges in reporting intellectual capital 15 5.5 Challenges in disclosure of intellectual capital 16 6. VALUATION OF INTELLECTUAL CAPITAL 17 6.1 Value added approach 17 6.2 Value creation index 18 6.3 Valuation models 20 6.3.1 Traditional valuation models 20 6.3.2 Static valuation models 21 6.3.3 Dynamic valuation models 21 6.3.4 Real option models (ROM) 22 7. CONCLUSION 23 INTRODUCTION Capital, in the business context, refers to any asset that will produce future cash flows. The most well known asset types are...
Words: 7066 - Pages: 29
...45 Year 2008 10.2478/v10061-008-0005-y Intellectual Capital Measurement Methods Jolanta Jurczak* Introduction Evolution of economy has caused important changes in activity of companies on the global market. Nowadays we are observing a growth the importance of intellectual resources as an effective tool for increasing corporate competitiveness. This fact has caused the need to manage companies and to measure their performance in a new way. Measuring Intellectual Capital is essential and very important in order to compare different companies, to estimate their real value or even to control their improvement year by year. Also to improve the way in which companies manage its intellectual resources that generate value and give back some benefits in consequences maximizing advantages for the company. Authors like Kaplan and Norton (1996), Stewart (1997), and Kerssens (1999) use phrases like “If you can’t measure it, you can’t manage it” to justify the search for new Measurement Methods.1 But to measure Intellectual Capital is necessary to determine exactly what the Measurement Methods are, which are the best and which the company should choose to evaluate its assets in proper way. Properly using Intellectual Capital Measurement Methods can cause the creation of competitive advantage and in consequence create development of the whole company at the present day. The Concept and Classification of Intellectual Capital Intellectual Capital (IC) are an increasingly important...
Words: 4159 - Pages: 17
...COURSES 1& 2 The Intangible Economy: an Overview. Understanding Economic Change Generally speaking and according to our perception at present, we could say that production and products pertain to the material universe: production, which is based on natural resources and energy, is fundamentally tangible. We got so used to this idea that we do not attempt to analyze it any more. Our economic and legal constructions are based on production, ownership and exchange of tangible goods. Economy, as it appeared after the industrial revolution, comprised activities related to the transformation of natural resources and was mainly an economy of goods. Under the mass production system with homogenous goods, the knowledge content of goods was low and the most important phase of the production process was manufacturing, since firms relied on economies of scale for market performance. Hence, the tangible aspects of factors of production were the most important (productivity thereby explained by the amount of physical capital and quantity of labor employed). Nevertheless, with the development of the economy and society as a whole, the importance of knowledge increased, leading to information and ideas playing a crucial role in determining economic performance. Nowadays, the knowledge content of goods is higher, and the pre- and post- manufacturing phases are crucial for value creation. The new type of economy that is emerging is more about a shift of mindset relating to building and...
Words: 7944 - Pages: 32
...report intellectual capital Summary In today’s knowledge economy, intellectual capital has been playing an increasingly significant role in creating corporate sustainable competitive advantages and becomes instrumental in determining the enterprise value. Though measuring the value of intellectual capital is difficult, with the emerging of intellectual capital valuation models, a number of leading companies have decided to make additional intellectual capital disclosure. This paper discusses and illustrates the intellectual capital statement. How to effectively measure and disclose intellectual capital in external financial reporting and how the accounting rules for reporting intangibles limit the recognition of intellectual capital and will also be discussed. The final part is proposed approaches to intellectual capital reporting. Introduction Our world is in the rise of new economy, principally driven by the information and knowledge. Today, a number of companies and organizations rely heavily on the knowledge and skills of their stuff and the network of the customer. As these intangible assets became increasingly critical, the limitations on financial statements in explaining a company’s value stress the fact that the source of economic value is no longer the production of material goods but the creation of intellectual capital. Background Definition Stewart first defined intellectual capital as intellectual material-knowledge, information, intellectual property, experience-that...
Words: 1937 - Pages: 8
...SPECIAL INTEREST GROUP VALUING A BIOTECHNOLOGY COMPANY DAVID RANDERSON ACUITY TECHNOLOGY MANAGEMENT PTY LTD Melbourne, May 2001 1. Valuation Methodologies Techniques used for valuing intangible assets, of which intellectual property (IP) is one form, may be put into three main categories1: 1. Cost Based; 2. Market Based; and 3. Revenue Based. Biotechnology companies, because their main assets are generally IP, have values that are invariably determined by their intangible assets. The valuation of a mature company tends to follow a methodology that draws heavily on its historical income, either by performing a discounted cash flow of future earnings the confidence in which derives from past activity, or capitalisation of maintainable earnings. Another technique considers the orderly realisation of assets. As most biotechnology companies have no historical revenues and the tangible assets are not representative of a company’s real value, these methods are seldom applicable. Conceptually, the value of a company is the sum of its assets value. However, accounting practices allow companies to reflect only the tangible part of their assets. Obviously, high valuations of companies that are in negative cash flow and with minimal tangible assets is causing concern to the taxation office (as demonstrated by their stance on core technology valuations in R&D syndicates) and the Australian Securities and Investment Commission (ASIC). 1 Reilly RF, Schweihs RP, Valuing Intangible...
Words: 5247 - Pages: 21
...AUDIT CRUNCH: REFORMING AUDITING 3 Fundamental Flaws in Current Audit Practice 1st point From this journal, it mainly focuses on the debating of three issues which are deeply embedded in the current auditing practices. Firstly, auditing model is one of the fundamental issues that exist in the auditing practices. It makes auditors’ financially dependent upon companies and persuades them to prioritize their own economic interest at the expense of other parties which may have an interest in audits. This is because auditors are remunerated by the client company rather than by an independent body and resulting the auditors are not able to retain sufficient distance in delivering independent audit. Auditing firms used their control of the auditing markets to colonies adjacent a market to sell consultancy services to audit clients where it causes the auditing model in practice is further complicated. With this, it will increase the auditor fee dependency upon companies and hence cause impairment in the independence of an auditor. The current auditing model is flawed and cannot be repair as auditors are generally banned from selling consultancy services to audit clients. Potential Solution The legislators should be allowed to appoint auditors of major companies. Auditors will not fear of losing the job as they don’t have to socialize their client. Although the fees could come from client but legislator or government are the one selecting auditors for work. This is to segregate...
Words: 743 - Pages: 3
...Background We’ve come a long way since making the first ever mobile call in the UK on 1 January 1985. Today, more than 400 million customers around the world choose us to look after their communications needs. In 30 years, a small mobile operator in Newbury has grown into a global business and one of the most valuable brands in the world. We now operate in around 30 countries and partner with networks in over 50 more. In an increasingly connected world, it’s no longer just about being able to talk and text. Our network allows people to share images and videos as soon as they’re captured; to share thoughts and feelings as soon as they’re created. And because we now do more than just mobile in many markets, more customers look to Vodafone for great value in their fixed line and broadband services too. Vodafone understands that businesses need a communications partner with solutions that scale and adapt as their business needs change. They may need a few smart phones for voice and email on the move. Or they may require a fully integrated solution that enables sharing of documents, video conferencing and access to corporate applications from any location. Whatever their size and whatever their need, we are constantly looking for new, innovative ways to help our business customers grasp every opportunity in a simple and straightforward way. Our commitment to the community in which we operate extends beyond the products and services we offer. The cornerstone of our commitment to...
Words: 1486 - Pages: 6
...2008 ❘ 21 EXECUTIVE Brand equity is a widely accepted concept—but its definition is frustratingly elusive. Here we’ll explore the different perspectives that marketing, finance, and accounting have on the topic— and how these can be reconciled. Doing so is important because of the critical role that brand briefing equity plays in the demonstration of marketing accountability. This article puts forward four arguments that marketers can use to show how brand equity is a critical measure for demonstrating marketing’s role in adding to business value. My desire to develop a systematic approach about how to do this led me into brand consulting and a series of roles focused on brand strategy, brand measurement, and brand valuation. The combination of my new focus on customer value and my background in shareholder value proved to be an excellent foundation for exploring when,...
Words: 4151 - Pages: 17
...Prepared by: Cynthia Servison April 14, 2015 The amount of property and equipment on the balance sheet for the two most recent years are (dollars in millions) $27,743 (2014) and $25,867 (2013). Depreciation expense is (dollars in millions) $4,187 (2014) and $3,959 (2013). Amounts on the cash flow statement for depreciation is $8,067 (2014). Expenditure incurred on purchase of property, plant and equipment is called capital expenditure. Such an expenditure is capitalized which means it is recorded on the balance sheet instead of writing it off against revenues on income statement. The capitalized cost of an item of property, plant and equipment include, the invoice price of the plant paid to the supplier; the freight paid to bring the plant to the installation site, the installation fees paid to the engineers, the cost incurred on testing the plant minus related proceeds. The individual components of property and equipment for year end 2014 include (dollars in millions) land at $1,695, buildings and improvements at $5,236, machinery and equipment at $16,788, construction in progress at $4,114, special tools at $7,977, less accumulated depreciation of ($8,067). GM records property, plant and equipment, including internal use software, at cost. Major improvements that extend useful life or add functionality of property are capitalized. The gross amount of assets under capital leases is included in property, plant and equipment. Expenditures for repairs and maintenance...
Words: 3598 - Pages: 15
...names, trade symbols and trademarks that a company creates and legally protects as a way of differentiating itself from its competitors within the marketplace. A logo becomes a brand when it becomes associated with positive values through the extensive provision of good products and good services. 2. ‘‘A larger bundle of trademark and associated intellectual property rights.’’ Beyond the visual elements of branding, this definition includes intangible marketing tools such as domain names, packaging, written copy, advertising and product design rights – all of which can be registered and legally protected. Further than this, though, the term ‘‘property rights’’ often also takes into account those other assets that are required to deliver the promises of the brand. These may be specific knowledge and expertise, perhaps in the form of research, data, or software, or processes such as business models, supply chain figurations and manufacturing techniques. Intangible assets may also refer to market position intangibles, which are things like licenses, contracts, government permits and production quotas. This larger bundle of property rights is included in this definition of a brand because many believe that they have a big part to play in building customer loyalty and maintaining brand quality and integrity. The brand is, then, something much...
Words: 1666 - Pages: 7
...interpretation of regression analysis most commonly employed in applied economics; to provide participants with sufficient knowledge of regression methods to critically evaluate and interpret empirical research. On completion of this module students should be able to: demonstrate understanding of the assumptions and properties underlying regression analysis and the principle of ‘least squares’; interpret and manipulate the coefficients of multiple regression and performance criteria; conduct diagnostic checking of the validity of regression equations coefficients; appreciate the problems of misspecification, multicollinearity, heteroscedasticity and autocorrelation. Content: 1. Simple Regression Analysis 2. Multiple Regression Analysis 3. Dummy Variables 4. Heteroscedasticity 5. Autocorrelation Main Textbook: Dougherty, C. (2011). Introduction to Econometrics, 4th edition, Oxford. 2. Module Name: Computational Finance Code: P12614 Credits: 10 Semester: Spring 2011/12 Programme classes: 12 1-2 hour lectures/workshops Aims: The module aims to describe and analyse the general finance topics and introduces students to implement basic computational approaches to financial problems using Microsoft Excel. It stresses the fundamentals of finance; provides students with a knowledge and understanding on the key finance subjects such as money market, return metric, portfolio modelling, asset pricing, etc.; and equips students with the essential techniques applied in financial...
Words: 1425 - Pages: 6
...Case Memo of Roche Group Members: Cai Aiyong, Gong Haoran, Song, Shizhong, Li Wei, Zhou, Wenjun 1. Why is Roche seeking to acquire the 44% of Genentech it does not own? From Roche’s point of view, what are the advantages of owning 100% of Genentech? What are the risks? (1) reasons and advantages are as follows: A. Genentech had become an important part of Roche’s business, representing 24% of Roche’s pharmaceutical product sales in 2008. Several of Genentech’s pioneering products achieved very strong market positions due to their medical differentiation, commanding high prices. Products originating from Genentech represented 46% of total sales of Roche’s 20 top-selling drugs on a worldwide basis. Avastin, for example, accounted for 14% of Roche’s total pharmaceutical sales in 2008. The market had many “me-too” drugs, which were similar in composition and treatment to existing products, and relatively little innovation. Given the lack of success in bringing new and innovative drugs to market, many pharmaceutical companies were also seeking to diversify from the prescription drug business by acquiring generic-drug companies. B. Genentech was increasingly coming into direct competition with Roche in several U.S. markets. In developing small molecular products, Genentech had begun to encroach on Roche’s traditional territory, while Roche was preparing to launch products in the U.S. that would compete with existing Genentech products. A merger of the two companies would...
Words: 1671 - Pages: 7
...Taxation Virtual Income: Is it really taxable? János Szakács BA IB Year 3 5/11/11 Table of Contents 1. Introduction .......................................................................................................................... 2 Virtual worlds and incomes .................................................................................................... 2 2. Theoretical background ...................................................................................................... 4 2.1 Income definitions ........................................................................................................... 4 2.2 Practicality issues of incomes ......................................................................................... 5 3. Taxing Virtual Income ........................................................................................................ 7 3.1 Taxing RMTs ................................................................................................................... 7 3.2 Taxing IWTs .................................................................................................................... 8 3.2.1 Drops .......................................................................................................................... 8 3.2.2 Exchanges ................................................................................................................... 9 3.3...
Words: 4701 - Pages: 19
