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What is the meaning of "no. of year purchase" at the time of valuation of goodwill
what is the meaning of "no. of year purchase" at the time of valuation of goodwill
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Shivam
it means expectation of purchasing firm to generate same operating profits from the business of vendor firm in future
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Rucha rajesh shingvekar
![best-answer]()
see this example
![cropped5369055747022537541.jpg]()
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Rucha rajesh shingvekar
![best-answer]()
Number of years' purchase is the number of years' for which the firm will expect to earn the same amount of profit because of the past efforts of the firm after change of ownership
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Durgesh rawat
The valuation of goodwill is often based on the customs of the trade and generally calculated as number of year's purchase of average profits or super-profits. ... After calculating average profit, it is multiplied by a number (3 or 4 years), as agreed. The product will be the value of the goodwill.