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Use a denominator-only change
A fictional issuer reports goodwill of 80 and total assets of 1,000 in the first period. In the second, goodwill remains 80 while total assets fall to 800. The goodwill share rises from 8% to 10% without any increase in goodwill.
| Period | Goodwill | Total assets | Share |
|---|---|---|---|
| First | 80 | 1,000 | 8% |
| Second | 80 | 800 | 10% |
Separate goodwill from a combined intangible line
A combined goodwill-and-intangibles line can contain several items with different movement explanations. Do not infer the cause of the entire combined balance from one label.
Inspect the reconciliation and supporting notes
Acquisitions, impairment, foreign-currency changes and other balance movements may need separate examination. The percentage is a starting point for that investigation rather than proof of a serial-acquisition strategy.
Keep absolute amounts beside shares
Showing the numerator and denominator alongside their ratio makes a composition change easier to interpret. A share alone can hide a shrinking asset base.