Human Asset Accounting LO17317

Eugene Taurman (
Fri, 06 Mar 1998 07:50:16

Replying to LO17288 --

I know of no direct valuation employees however there is a factor called
goodwill in valuation of companies.

When a company being sold and the buyer & seller are trying to find a
mutually acceptable price "goodwill is used to allow for value above and
beyond the value of the assets and liabilities.

A company is worth Assets - Liabilities + its' ability to earn a returns
above and beyond a safe return

For example If a company has a book net worth of $1,000,000 and it is
earning $500,000 and if a safe investment would return say 10% then the
value of this company could be as much as $5,000,000 if it is a safe
investment. If it were more risky the value might be only $3,000,000. In
any case the difference between the hard asset value and the value
reflected by it's ability to earn money may be called good will by

Good will is generally considered to be costumery relationships brought
about by the way the company performed and is a reflection of the value of
people and historical magenta practice.

This a brief and partial explanation of the concept. there are very
specific legal rules and more detailed explanation of company value but
the value of a company is always determined by the buyer of the company
the it be in the stock market or an individual buyer . This concept is
often applied when a company changes hands.


At 05:17 AM 3/5/98 -0500, you wrote:
>One of our network members has asked me if I knew of any company or
>organisation which accounts for the value of its people in its annual
>reports. This is more specific than a message about how wonderful the
>employees have been and he is interested in whether there are any examples
>of attempts to place a financial value on skills and attributes of the

Eugene Taurman

What you are is determined by the thoughts that dominate your mind.
Paraphrase of Proverbs 23 Ch7


Eugene Taurman <>

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