The Multiple of Earnings for Goodwill calculator computes the value of goodwill based on a multiple of corporate earnings.
INSTRUCTIONS: Choose units and enter the following:
Goodwill (GW): The calculator returns the value of goodwill in US dollars (USD). However, this can be automatically converted to compatible units via the pull-down menu.
in excess to the book value. A common driver of goodwill is earnings, and a common method of computing good will is by using a multiple of earnings.
In many cases, a valuation attributes a value of five (5) times earnings. This suggests that the acquiring company can have the acquisition pay for itself in five years.
GW = AE • M