intangible asset

description: asset that lacks physical substance and usually is very hard to evaluate

178 results

pages: 344 words: 94,332

The 100-Year Life: Living and Working in an Age of Longevity
by Lynda Gratton and Andrew Scott
Published 1 Jun 2016

In this chapter we focus on the priceless – on intangible assets. Intangible assets play a crucial role in all our lives. For most of us, while money is indeed important, it is not an end in itself. We make money for what it can deliver for us. For most people, a good life would be one with a supportive family, great friends, strong skills and knowledge, and good physical and mental health. These are all intangible assets and it is not surprising they are as important as financial assets when it comes to building a productive long life. However, these intangible assets are not independent from tangible ones; rather they play an important reciprocal role in the development of tangible assets.

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If you move country you cannot sell one friend and buy another in a new place, and if the knowledge you have mastered is no longer valuable, it cannot simply be sold and new skills bought. The impact of this irreversibility is that care has to be taken when choices are made about investing in intangible assets and there has to be concern about a sudden loss in value. Just as an earthquake can render a house worthless, so external shifts can make intangible assets lose value. Yet just because intangible assets can’t be easily priced or traded doesn’t mean they aren’t valuable.2 Questions about the importance of intangible assets relative to tangible assets is a recurring theme across literature and religions.3 Take, for example, studies in the psychology of what creates a happy purposeful life.

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In other words, as a country becomes richer, happiness doesn’t appear to increase and this suggests that other factors dominate in what gives people a sense of well-being.5 Of course, none of this means that money doesn’t matter. While money can’t buy intangible assets outright, you still need money and financial security to invest in your intangible assets; money helps buy gym memberships, family holidays and peace of mind to share leisure with loved ones. And just as money helps support intangible assets, these in turn help support financial success. These are important inter-linkages and getting the balance right is crucial for planning for a 100-year life. Asset-rich Given this definition of intangible assets, the list of possibilities to consider is potentially huge. For instance, there is evidence that beauty is an important asset.

pages: 346 words: 89,180

Capitalism Without Capital: The Rise of the Intangible Economy
by Jonathan Haskel and Stian Westlake
Published 7 Nov 2017

Those characteristics are summed up in four S’s, namely that intangible assets, relative to tangible assets, are more likely to be scalable, their costs are more likely to be sunk, and they are inclined to have spillovers and to exhibit synergies with each other. Investment changes all the time; from warehouses and wharves to mineshafts and mills; from machine tools and dynamos to cooling towers and cash registers, servers, and solar arrays. So why should we care about the move from tangible to intangible assets that we described in chapters 2 and 3? As we will show, intangible assets are different from tangible assets in a number of important ways.

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Now, perhaps the contestedness of intangible assets that we discussed in chapter 4 encourages firms to spend money asserting or protecting their claims to them. In recent years, an increasing proportion of lobbying in the United States has been carried out by technology firms; typically, these firms are lobbying in relation to valuable intangible assets they own, such as Google’s right to use its valuable data and software in particular ways, or Uber’s and AirBnB’s rights in respect of their valuable networks of drivers and hosts. The rewards for successful lobbying are very high: all these intangible assets are highly scalable and are intrinsic to their owners’ business models.

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But companies that rely on exploiting existing intangible assets may look very different, especially where the intangible assets are organizational structure and processes. These may be much more controlled environments—Amazon’s warehouses rather than its headquarters. Leadership will be increasingly prized, to the extent that it allows firms to coordinate intangible investments in different areas and exploit their synergies. Financial investors who can understand the complexity of intangible-rich firms will also do well. The greater uncertainty of intangible assets and the decreasing usefulness of company accounts put a premium on good equity research and on insight into firm management.

pages: 285 words: 58,517

The Network Imperative: How to Survive and Grow in the Age of Digital Business Models
by Barry Libert and Megan Beck
Published 6 Jun 2016

Network orchestrators capitalize on the ability of their networks to grow organically as individuals spread the network among those they influence. Intangible Assets Require New Management Practices The surge of available intangible assets creates both risk and opportunity for companies. Leaders of digital network organizations realize that success now relies on their ability to manage intangible assets as well as, if not better than, their tangible counterparts. Unfortunately, most corporate leaders have thirty or more years of experience in managing physical assets, and five or fewer years in managing intangible assets. Let’s discuss the key differences in modern management, both the good and the bad.

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Principle 2, Assets: From Tangible to Intangible The second principle is to move from tangible to intangible assets. On the left side of the spectrum are companies with physical products, very little intellectual capital, and low use of human capital, either internally or through external networks. On the right side of the spectrum are companies based entirely on intangible assets such as intellectual property or relationships. These companies usually rely on digital technology to support the scaling of their intangible assets. Those companies on the far right side of the spectrum are network orchestrators that differentiate themselves by accessing the intangible assets of an external network rather than owning and managing assets.

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On average, manufacturing companies, such as the one that made your computer, trade at valuations 2× revenues, whereas companies that generate new intellectual capital such as software trade at valuations 5× revenues. Thus, the market values tangible assets and intangible assets differently than corporations and accountants do. The Sources of Value Are Changing As recently as 1975, 83 percent of the market value of the S&P 500 companies was made up of tangible assets. In those days, leaders had to focus on plants, inventory, and production. By 2015, however, the proportions had reversed. In 2015, some 84 percent of market value was now composed of intangible assets.1 Intangible assets are grounded in people. Things such as our ideas, our relationships, our advocacy, and our experiences are of great value to other people and organizations, and these assets do not diminish with use.

pages: 338 words: 85,566

Restarting the Future: How to Fix the Intangible Economy
by Jonathan Haskel and Stian Westlake
Published 4 Apr 2022

Drechsel (2021), Greenwald (2019), and Lian and Ma (2021) have highlighted the pervasive use of loan covenants related to earnings. And Lim, Macias, and Moeller (2020) show that after an accounting change that booked intangible assets, borrowing rose; importantly, borrowing rose after the accounting change when identified intangibles assets rose, not all intangible assets. (Assets were identified by a record of the purchase price paid for them and consisted of things like trademarks, domain names, and mineral rights.) An unidentified intangible asset was acquisition goodwill. 9. Lian and Ma 2021. 10. Dell’Ariccia et al. 2017. 11. Kaoru, Daisuke, and Miho 2017. 12. Lim, Macias, and Moeller 2020. 13.

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Equally severe challenges exist not only in the financial markets and banking systems that provide finance to private-sector businesses but also in the monetary policy regimes that underpin them. Most external finance for businesses takes the form of debt. But intangible-intensive businesses are not well suited to debt finance. Intangible assets are difficult to pledge as collateral, and the winner-takes-all nature of intangible assets makes assessing creditworthiness more difficult. These realities weaken central banks’ ability to manage economic cycles by altering interest rates. The solution is institutional change in how we regulate financial institutions, increasing their ability to invest in intangibles-rich businesses, combined with tax and regulatory rules that favour debt over equity.

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Its market capitalisation in 2018 was around $1 trillion. Its tangible assets, mostly buildings, cash, and other savings, were valued at only 9 percent of Apple’s market value.38 A large chunk of the rest of its value resides in intangible assets: things that were costly to acquire, last a long time, and are valuable to the company, but are not physical. Apple’s intangible assets include the knowledge gained from R&D, the design of its products, its widely trusted brands, the valuable and durable relationships with its suppliers (including both its physical supply chain and the developers who support the Apple ecosystem), staffers’ internal firm knowledge and relationships, the software in its operating system, and its vast data resources.

pages: 439 words: 79,447

The Finance Book: Understand the Numbers Even if You're Not a Finance Professional
by Stuart Warner and Si Hussain
Published 20 Apr 2017

Similarly, where an asset is financed specifically by borrowings then the actual finance cost can be capitalised as part of the cost of the asset rather than expensed. Amortisation Depreciation and amortisation are synonymous concepts. Amortisation is to intangible assets as depreciation is to tangible assets. Tangible means physical in nature whereas intangible assets are non-physical. Examples of intangible assets include patents and licenses (see Chapter 10 Goodwill and other intangibles). Optional detail Indefinite (or infinite) life assets Freehold land is not depreciated. Land is a unique tangible asset that is considered to have an indefinite/infinite life.

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Foreign exchange differences arising on translation are recognised in the income statement. (f) Intangible assets The Group’s only intangible assets relate to software and the costs of its implementation which is measured at cost less accumulated amortisation and accumulated impairment losses. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in the income statement as incurred. Amortisation is recognised in the income statement on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use.

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We continue to be encouraged by the results of the programme, which is expected to make an annual net contribution of around £6.0 million once all the key functionality is in place, as well as making us more agile in terms of our ability to adopt further change in the future. Within Greggs intangible assets note are software and assets under development. The note shows that during the last two financial years Greggs has invested £9.8 million in software and assets under development. 10. Intangible assets Group and Parent Company Software £’000 Assets under development £’000 Total £’000 Cost Balance at 29 December 2013 1,715 – 1,715 Additions 817 2,992 3,809 Balance at 3 January 2015 2,532 2,992 5,524 Balance at 4 January 2015 2,532 2,992 5,524 Additions – 5,981 5,981 Balance at 2 January 2016 2,532 8,973 11,505 Amortisation Balance at 29 December 2013 703 – 703 Amortisation charge for the year 100 – 100 Balance at 3 January 2015 803 – 803 Balance at 4 January 2015 803 – 803 Amortisation charge for the year 454 – 454 Balance at 2 January 2016 1,257 – 1,257 Carrying amounts At 29 December 2013 1,012 – 1,012 At 3 January 2015 1,729 2,992 4,721 At 4 January 2015 1,729 2,992 4,721 At 2 January 2016 1,275 8,973 10,248 Assets under development relate to software projects arising from the investment in new systems platforms. 2 Cash versus accruals accounting ‘Remember that credit is money.’

pages: 353 words: 88,376

The Investopedia Guide to Wall Speak: The Terms You Need to Know to Talk Like Cramer, Think Like Soros, and Buy Like Buffett
by Jack (edited By) Guinan
Published 27 Jul 2009

In an acquisition, the amount paid for the company over book value usually accounts for the target firm’s intangible assets. Investopedia explains Goodwill Goodwill is seen as an intangible asset on the balance sheet because it is not a physical asset such as buildings and equipment. Goodwill typically reflects the value of intangible assets such as a strong brand name, good customer relations, good employee relations, and patents or proprietary technology. Related Terms: • Balance Sheet • Book Value • Generally Accepted Accounting Principles—GAAP • Intangible Asset • Tangible Asset Gordon Growth Model What Does Gordon Growth Model Mean?

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Also, many IPOs are issued by companies going through a transitory growth period and are subject to additional uncertainty about their future values. Related Terms: • Equity • Private Equity • Underwriter • Investment Bank • Stock 140 The Investopedia Guide to Wall Speak Intangible Asset What Does Intangible Asset Mean? A company’s nonphysical assets, such as intellectual property (items such as patents, trademarks, copyrights, and business methodologies), goodwill, and brand recognition; an intangible asset can be classified as either indefinite or definite. A company’s brand name is considered an indefinite asset, as it stays with the company as long as the company continues operations.

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Related Terms: • Asset • Book Value • Intangible Asset • Net Tangible Assets • Price to Tangible Book Value—PTBV Tangible Net Worth What Does Tangible Net Worth Mean? A measure of the physical worth of a company minus any value derived from intangible assets such as copyrights, patents, and intellectual property. Tangible net worth is calculated by taking a firm’s total tangible assets and subtracting the value of all liabilities and intangible assets. Tangible net worth is calculated as shown here: Tangible Net Worth = Total Assets − Liabilities − Intangible Assets Investopedia explains Tangible Net Worth In personal finance, tangible net worth is the sum of all of a person’s tangible assets (cash, home, cars, etc.) minus any liabilities that person may have.

pages: 374 words: 94,508

Infonomics: How to Monetize, Manage, and Measure Information as an Asset for Competitive Advantage
by Douglas B. Laney
Published 4 Sep 2017

With 1.49 billion active monthly users, the value of each active account is about $211. 11 “Ocean Tomo Releases 2015 Annual Study of Intangible Asset Market Value,” Ocean Tomo Insights Blog, 05 March 2015, www.oceantomo.com/blog/2015/03-05-ocean-tomo-2015-intangible-asset-market-value/. 12 “Asset,” Merriam-Webster, accessed 09 February 2017, www.merriam-webster.com/ C:\Users\dlaney\Google Drive\InfonomicsBook\Manuscript\Merriam-Webster. http:\www.merriam-webster.com\dictionary\asset. 13 Investopedia Staff, “Asset,” Investopedia, 01 April 2016, www.investopedia.com/terms/a/asset.asp. 14 “Statement of Financial Accounting, Concepts No. 6, Elements of Financial Statements, a Replacement of FASB Concepts Statement No. 3 (Incorporating an Amendment of FASB Concepts Statement No. 2),” Financial Accounting Standards Board, December 1985, www.fasb.org/resources/ccurl/792/293/CON6.pdf. 15 “The Conceptual Framework for Financial Reporting,” IFRS Foundational Staff, 01 January 2014, www.ifrs.org/IFRSs/Documents/Technical-summaries-2014/Conceptual%20Framework.pdf. 16 “IAS 38—Intangible Assets,” IASPlus, Deloitte, www.iasplus.com/en/standards/ias/ias38. 17 Additionally, information meets each of the IFRS criteria for intangible assets. 18 “Technical Summary, IAS 38 Intangible Assets,” IFRS, 01 January 2014, www.ifrs.org/IFRSs/Documents/Technical-summaries-2014/IAS%2038.pdf. 19 IFRS criteria for intangible assets include: a) an intention to complete and use or sell it, b) an ability to use or sell it, c) it will generate probable future economic benefits and/or there is a market for it, d) an ability to measure reliably the expenditure attributable to it during its development. 20 “Technical Summary, IAS 38 Intangible Assets,” IFRS, 01 January 2014, www.ifrs.org/IFRSs/Documents/Technical-summaries-2014/IAS%2038.pdf. 21 It is generally understood that “similar items in substance” includes information assets. 22 “International Financial Reporting Standard 3, Business Combinations,” IFRS, 18 February 2011, http://ec.europa.eu/internal_market/accounting/docs/consolidated/ifrs3_en.pdf. 23 “Discussion Paper, Initial Accounting for Internally Generated Intangible Assets,” The Office of the Australian Accounting Standards Board, 2008, www.saica.co.za/Portals/0/Trainees/documents/DPInitialAccountingInternallyGeneratedIntangibleAssets.pdf. 24 “FASB Invitation to Comment, Agenda Consultation: Financial Accounting Standards Board,” FASB, 04 August 2016, www.fasb.org/cs/ContentServer?

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To further establish the control aspect of an asset, accounting standards require the condition that it is identifiable. This applies specifically to intangible assets wherein there is some question of separability—meaning that they are not inexorably bound to another asset or unable to be quantified. International Accounting Standard 38 (IAS 38) details the requirements for identifying and capitalizing intangible assets. It defines intangible assets as “non-monetary assets which are without physical substance.” The standard further specifies that recognizable intangibles must be “identifiable (either being separable or arising from contractual or other legal rights).”

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But we are no longer in the industrial age.4 Elliot suggested that in order for the U.S. to maintain its advantage, it must move to the “next plateau of transparency,” as he called it. Over a decade and a half since this hearing, what has been done to improve transparency or to formally account for information and other intangible assets while the economy has become ever more digital? Not much, according to Tom Linsmeier, retiring board member of Financial Accounting Standards Board (FASB), who said: “[T]he current accounting model fails to provide much information on most internally developed intangible assets, resulting in an often-increasing market to book ratio for these organizations and leaving users with little financial reporting information to make their valuation assessments.”5 Irrespective of what accountants say or do, Linsmeier told me, “Accounting standards boards should be asking for an increased disclosure of internally-generated assets.”6 Here we are in the midst of the Information Economy, and the eponymous major source of value in that economy is considered valueless by the custodians of what constitutes value!

pages: 892 words: 91,000

Valuation: Measuring and Managing the Value of Companies
by Tim Koller , McKinsey , Company Inc. , Marc Goedhart , David Wessels , Barbara Schwimmer and Franziska Manoury
Published 16 Aug 2015

The DTA for tax loss carryforwards ($600 million) shows up as a nonoperating asset and should be valued separately. The deferred-tax liability related to the acquired intangibles ($2,050 million) is treated as an offset to the intangible asset itself, since the asset was grossed up for hypothetical taxes when the asset was created. Why net deferred taxes for intangible assets against acquired intangibles? When a company buys another company, it typically recognizes intangible assets for intangibles that are separable and identifiable (such as patents). These intangible assets are amortized over their estimated life on the GAAP income statement, but since the amortization is not deductible in most countries for tax purposes, a mismatch will occur.

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REORGANIZING THE ACCOUNTING STATEMENTS: IN PRACTICE 185 EXHIBIT 9.8 UPS: Deferred-Tax Assets and Liabilities $ million Reported in UPS 10-K, note 12 Reorganized financials 2011 2012 2013 Assets Pension and postretirement benefits Loss and credit carryforwards Insurance reserves Vacation pay accrual Stock compensation Other deferred-tax assets Deferred-tax assets 2,106 259 696 208 211 635 4,115 4,608 258 737 209 159 708 6,679 3,086 279 765 224 70 709 5,133 Valuation allowance Deferred-tax assets, net (205) 3,910 (220) 6,459 (251) 4,882 Liabilities Property, plant, and equipment Intangible assets, capitalized software 1 Intangible assets, acquired 2 Other Deferred-tax liabilities Net deferred-tax assets (liabilities) 2011 2012 2013 259 (205) 54 258 (220) 38 279 (251) 28 Operating deferred taxes Loss and credit carryforwards Valuation allowance Loss and credit carryforwards, net of taxes Insurance reserves Vacation pay accrual Stock compensation Other deferred-tax assets Property, plant, and equipment Intangible assets, capitalized software1 Other deferred-tax liabilities Operating deferred-tax assets (liabilities) 696 737 765 208 209 224 211 159 70 635 708 709 (3,607) (3,624) (3,613) (878) (969) (1,023) (554) (617) (651) (3,235) (3,359) (3,491) Nonoperating deferred taxes Pension and postretirement benefits 2,106 4,608 3,086 Intangible assets, tax gross-up Intangible assets, acquired2 (73) (66) (93) Net deferred-tax assets (liabilities) (1,202) 1,183 (498) (3,607) (3,624) (3,613) (878) (969) (1,023) (73) (66) (93) (554) (617) (651) (5,112) (5,276) (5,380) (1,202) 1,183 (498) 1 Estimated at the marginal tax rate times capitalized software. 2 Estimated at the marginal tax rate times acquired intangibles.

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pages: 401 words: 109,892

The Great Reversal: How America Gave Up on Free Markets
by Thomas Philippon
Published 29 Oct 2019

At its peak, it accounted for about two-thirds of Helsinki’s stock exchange market capitalization, almost half of corporate research and development, and about 20 percent of Finnish exports.d We should be careful, then, when comparing consolidated firm revenues (including foreign sales) to domestic GDP. Finally, the Intangible Assets hypothesis contains several ideas. Intangible assets are nonphysical in nature. They include intellectual property, like patents and copyrights, but extend to vague or fuzzy assets, such as brand recognition. Economists Nicolas Crouzet and Janice Eberly (2018) argue that industry leaders are often firms that are very good at producing intangible assets. In fact, they argue that this is how they became leaders in the first place. The attractive feature of a theory of intangible assets is that it can explain concentration both through increasing productivity (superstar firms) and through decreasing domestic competition since intangible assets can create barriers to entry.

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A significant share of today’s capital is intangible. It includes patents, software, chemical formulas, databases, artistic value, special employee training, design, processes, and brand recognition. Intangible assets are not just about information technologies, however. Some intangible assets rely on computers—software and databases—but some are embedded in people, organizations, and brands. Intangible assets are also important in classic, “old-fashioned” manufacturing industries. Economists are pretty good at measuring tangible investment. Tangible assets are usually purchased from another firm, as opposed to produced internally.

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FIGURE 3.2 Turnover at the top. See text for details. Figures 3.2 and 3.3 are consistent with decreasing domestic competition. They are also consistent with the hypotheses of the rise of superstar firms and the role of intangible assets if we assume that the comparative advantages of leaders have become more persistent. Why that would be the case is unclear, however. I have often heard arguments that intangible assets are subject to higher increasing returns to scale than tangible assets, but I have not seen convincing evidence that this is the case. In fact, I will show later that standard estimates of returns to scale have not changed much over the past twenty years.

The End of Accounting and the Path Forward for Investors and Managers (Wiley Finance)
by Feng Gu
Published 26 Jun 2016

It mandates the immediate expensing of practically all internally generated research and development efforts.4 And not just R&D. Practically all other internal investments in intangible assets—brands, know-how, business systems—are immediately expensed. The folly of this wide-ranging accounting rule is made clear by looking once more at Figure 8.1 (p. 82) portraying the total corporate investment in tangible and intangible assets. Ironically, most of the investments reflected by the fast-rising So, What to Do with Accounting? A Reform Agenda 215 curve—intangible assets—are denied assets status by accountants, whereas those on steep decline—tangible assets—proudly populate corporate balance sheets.

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To avoid undue reader suspense, here are, in essence, the three major reasons for accounting’s relevance lost: 1. The inexplicable accounting treatment of intangible assets—the dominant creators of corporate value. Something remarkable happened to the US economy, and to varying degrees of similarity to other developed countries, in the past four decades: While aggregate US investment in tangible assets (things you can touch, like property, 77 78 WHY IS THE RELEVANCE LOST? plant and equipment, inventory, etc.) has decreased by over a third, corporate investment in intangible assets (patents and know-how, brands, information and business systems, and human capital) rose by almost 60 percent, from 9 percent to 14 percent of gross value added.

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This creates a widening chasm between firms’ values, as reflected by share prices, and financial data—a chasm that is partially responsible for the declining association between financial information and share prices, which we have documented in Part I. The three usefulness-diminishing factors we just outlined are not conjectures; nor are they speculation. In what follows, we will empirically prove, for the first time, that these three factors or causes— intangible assets, accounting estimates, and unrecorded business events—are primarily responsible for the deterioration in the usefulness of financial information. We will also show that the impact of each of the three factors has increased over time, mirroring the documented decrease in the usefulness of financial information.

Financial Statement Analysis: A Practitioner's Guide
by Martin S. Fridson and Fernando Alvarez
Published 31 May 2011

To be sure, if a company wrote off a billion dollars’ worth of goodwill, its ratio of assets to liabilities declined. Its ratio of tangible assets to liabilities did not change, however. The rating agencies monitored both ratios but had customarily attached greater significance to the version that ignored intangible assets such as goodwill. HOW GOOD IS GOODWILL? By maintaining a skeptical attitude to the value of intangible assets throughout the New Economy excitement of the late nineties, Moody's and Standard & Poor's were bucking the trend. The more stylish view was that balance sheets constructed according to GAAP seriously understated the value of corporations in dynamic industries such as computer software and e-commerce.

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On the whole, the rating agencies appear to have shown sound judgment during the 1990s by resisting the New Economy's siren song. While enthusiasm mounted for all sorts of intangible assets, they continued to gear their analysis to tangible-assets-only versions of key balance sheet ratios. By and large, therefore, companies did not alter the way they were perceived by Moody's and Standard & Poor's when they suddenly took an ax to their intangible assets. More generally, asset write-offs do not cause ratings to fall. Occasionally, to be sure, the announcement of a write-off coincides with the disclosure of a previously unrevealed impairment of value, ordinarily arising from operating problems.

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If the transaction was structured as the Journal stated, the extra money paid out to Dough-Re-Mi became part of an intangible asset, reacquired franchise rights, which would not amortize. That is, no scheduled, bit-by-bit write-down would reduce future earnings. On the other hand, when the very same dollars came back to Krispy Kreme, they would be recorded as interest income. In essence, according to the Wall Street Journal's story, Krispy Kreme manufactured earnings by taking money out of one pocket and putting it into another. The money given to Dough-Re-Mi to cover the closing costs also became an intangible asset, again assuming the Journal's account was accurate.

pages: 141 words: 40,979

The Little Book That Builds Wealth: The Knockout Formula for Finding Great Investments
by Pat Dorsey
Published 1 Mar 2008

Great products, great size, great execution, and great management do not create long-term competitive advantages. They’re nice to have, but they’re not enough. 3. The four sources of structural competitive advantage are intangible assets, customer switching costs, the network effect, and cost advantages. If you can find a company with solid returns on capital and one of these characteristics, you’ve likely found a company with a moat. Chapter Three Intangible Assets You Can’t Pull Them Off A Shelf, But They Sure Are Valuable. “INTANGIBLE ASSETS” sounds like a grab-bag category for competitive advantage, and in some ways it is. On the surface, brands, patents, and regulatory licenses have little in common.

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As a result, while there are regional variations in gasoline pricing, refiners generally can barely eke out high-single-digit to low-teens returns on capital over a cycle, while aggregate producers and waste haulers enjoy much steadier returns on invested capital in the mid to upper teens over many years. One Moat Down, Three to Go Although intangible assets may be just that—I can’t haul a brand or patent off a shelf and show it to you—they can be extremely valuable as sources of competitive advantage. They key in assessing intangible assets is thinking about how much value they can create for a company, and how long they are likely to last. A well-known brand that doesn’t confer pricing power or promote customer captivity is not a competitive advantage, no matter how familiar people may be with it.

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Table of Contents Little Book Big Profits Series Title Page Copyright Page Foreword Acknowledgments Introduction Chapter One - Economic Moats Moats Matter for Lots of Reasons Chapter Two - Mistaken Moats Moat . . . or Trap? These Moats Are the Real Deal Chapter Three - Intangible Assets Popular Brands Are Profitable Brands, Right? Patent Lawyers Drive Nice Cars A Little Help from the Man One Moat Down, Three to Go Chapter Four - Switching Costs Joined at the Hip Switching Costs Are Everywhere Chapter Five - The Network Effect Networks in Action Chapter Six - Cost Advantages A Better Mousetrap Location, Location, Location It’s Mine, All Mine It’s Cheap, But Does It Last?

pages: 447 words: 111,991

Exponential: How Accelerating Technology Is Leaving Us Behind and What to Do About It
by Azeem Azhar
Published 6 Sep 2021

Compare a taxi platform like Uber to a cab company that owns its own vehicles. Uber’s algorithm – its key intangible asset – is highly scalable, whereas the traditional cab company needs to add a new cab each time it wants to grow. Software businesses all follow that same principle. The upfront cost of the first copy of the software is enormous. However, every subsequent copy is essentially produced for free. If the network effect and the platform are the foundations of the exponential company, then intangible assets are the bricks that make it up. The tendency of intangible assets to help companies scale reaches its zenith when a business is drawing on artificial intelligence.

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The software that runs Google’s search engine, the data that represents the network of friends in Facebook, the designs and brand identity of Apple, the algorithms that recommend your evening’s viewing on Netflix – this is where their true value lies. Economists call these non-physical assets ‘intangible’.22 The speed of the shift to intangible assets has been remarkable. In 1975, about 83 per cent of the market value of companies on the Standard and Poor 500 stock market index comprised tangible assets. Intangible assets accounted for the remaining 17 per cent. By 2015, those proportions had reversed. Only 16 per cent of the S&P 500’s value could be accounted for by tangible assets, and 84 per cent by intangibles.23 This ratio skews even further when you look at the largest firms in the world: the exponential superstars.

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To figure out a firm’s book value you tally up a company’s cash, what it is owed by customers, and its physical assets, and then subtract its liabilities. The stock market valued those firms, at the time, at $3.5 trillion. In other words, traditional assets represented only 6 per cent of what the market thought these companies were worth – their intangible assets were doing the rest of the work.24 The changing relationship between tangible and intangible assets can be seen in the make-up of the goods all around us. Today, the value of a product tends to come from the early stages of its creation (its research and design) and in the later stages (the branding and service). The actual manufacturing process is becoming less and less important.

pages: 261 words: 63,473

Warren Buffett Accounting Book: Reading Financial Statements for Value Investing (Warren Buffett's 3 Favorite Books)
by Stig Brodersen and Preston Pysh
Published 30 Apr 2014

While cash may be nice to have today, companies may find themselves short-handed if the funds aren’t used to purchase more valuable assets or service expensive debt. Intangible assets—net (8) A corporation might also acquire intangible assets in a given year with the aim of improving its market position; for example, Coca-Cola might patent a new soft drinks recipe. That is often a good thing. Big investments in tangible assets do not always indicate a growing business. For many companies, the growth in tangible and intangible assets goes hand in hand. As in the above case, you will most likely find this line to be negative too. That is what you should be looking for. Sometimes a corporation will sell intangible assets if the assets fail to increase profitability or if they are no longer considered a part of the organization’s core operating activities.

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Capitalization is how intangibles like patents and trademarks are entered into the balance sheet. Just as tangible assets get depreciated, intangible assets also lose value if it is deemed that they cannot generate income. When intangible assets are depreciated, it’s called amortization. This is a very important category and one that Warren Buffett pays particular attention to. Since patents and trademarks provide a durable competitive advantage for a company, it is a great source of risk reduction. Additionally, intangible assets are generally unaffected by inflation. This means that as time marches on, the value of patents and trademarks increase in nominal dollars automatically.

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In general, I would say that if you cannot see a company’s moat, there are two reasons: the first is because it is not there; the second is that you do not sufficiently understand the company. In either case, you’ll assume a lot of risk if you invest in the company and you don’t understand its competitive advantage. Between all the very specific moats in industries, I would emphasize the following three: 1. Intangible assets such as brands and patents are one type of moat. Disney is an example. It is a strong brand and almost everyone in the world recognizes it. To demonstrate this idea, Warren Buffett uses the example of a mom picking up a movie for her kids on her way home from work. The Disney movie is $1 more expensive than another choice, and she does not know the quality of either of the movies.

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The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies
by Erik Brynjolfsson and Andrew McAfee
Published 20 Jan 2014

Research by Michael Luca of Harvard Business School has found that the increased transparency has helped smaller independent restaurants compete with bigger chains because customers can more quickly find quality food via rating services like Yelp, reducing their reliance on brand names’ expensive marketing campaigns.17 The intangible benefits delivered by the growing sharing economy—better matches, timeliness, customer service, and increased convenience—are exactly the types of benefits identified by the 1996 Boskin Commission as being poorly measured in our official price and GDP statistics.18 This is another way in which our true growth is greater than the standard data suggest. Intangible Assets Just as free goods rather than physical products are an increasingly important share of consumption, intangibles also make up a growing share of the economy’s capital assets. Production in the second machine age depends less on physical equipment and structures and more on the four categories of intangible assets: intellectual property, organizational capital, user-generated content, and human capital. Intellectual property includes patents and copyrights.

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Yet, while the hardware and software spending generally shows up as additions to the nation’s capital stock, the new business processes, which often outlast the hardware, are generally not counted as capital. Our research suggests that a correct accounting for computer-related intangible assets would add over $2 trillion to the official estimates of the capital assets in the United States economy.21 User-generated content is a smaller but rapidly growing third category of intangible assets. Users of Facebook, YouTube, Twitter, Instagram, Pinterest, and other types of online content not only consume this free content and gain the consumer surplus discussed above but also produce most of the content.

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In 1776, he noted, “The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding.”25 As we’ll discuss further later in the book, investments in human capital will be increasingly important as routine tasks become automated and the need for human creativity increases. Important as these intangible assets are, the official GDP ignores them. User-generated content, for example, involves unmeasured labor creating an unmeasured asset that is consumed in unmeasured ways to create unmeasured consumer surplus. In recent years, however, there have been some efforts to create experimental ‘satellite accounts.’ They track some of these categories of intangible assets in the U.S. economy. For instance, the new satellite accounts created by the Bureau of Economic Analysis estimate that investment in R&D capital accounted for about 2.9 percent of GDP and has increased economic growth by about 0.2 percent per year between 1995 and 2004.26 It’s hard to say exactly how large the bias is from miscounting all the types of intangible assets, but we are reasonably confident the official data underestimate their contribution.* New Metrics Are Needed for the Second Machine Age It’s a fundamental principle of management: what gets measured gets done.

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Competing on Analytics: The New Science of Winning
by Thomas H. Davenport and Jeanne G. Harris
Published 6 Mar 2007

In an Accenture/Economist Intelligence Unit survey, for example, “today’s senior executives see managing intangible assets as a major issue. Fully 94 percent consider the comprehensive management of intangible assets important; 50 percent consider it one of the top three management issues facing their company.”8 Someday, perhaps, intangible assets will be reported upon by companies as a part of their regular financial reporting processes, and they may be forced to create and report on analytics involving intangibles. This has also been advocated by Robert Kaplan and David Norton of Balanced Scorecard fame.9 There is no need to wait until such reporting is mandated by regulation, however.

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Blosch, Gartner’s 2006 EXP CIO Survey (Stamford, CT: Gartner, Inc., January 2006). 8. Accenture, “Intangible Assets and Future Value: An Accenture Study Conducted by the Economist Intelligence Unit,” January 2005, http://www.accenture.com/Global/Services/By_Subject/Shareholder_Value/R_ and_I/SurveyAssets.htm. 9. Robert S. Kaplan and David P. Norton, “Measuring the Strategic Readiness of Intangible Assets,” Harvard Business Review, February 2004, 52–63. 10. We addressed this issue in Jeanne G. Harris and Thomas H. Davenport, “The Information Environment for Intangible Asset Management,” Accenture Research Note, June 2004, http://www.accenture.com/Global/Research_and_Insights/Institute_For_High_Performance_Business/By_Publication_Type/Research_Notes/TheAssetManagement_old.htm. 11.

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Thus far, most quantitative analyses are about relatively tangible entities: inventory units, dollars, customers, and so forth. Most organizations realize, however, that intangible assets and capabilities are extremely important in their competitive success. For more than a decade, there have been arguments in favor of measuring and managing intangibles, which include such factors as human capital, intellectual capital, brand, R&D capability, and other nonfinancial assets. Numerous articles and books have been written on the subject, and there is a consensus that intangible assets are important to both company success and external perceptions of company value. In an Accenture/Economist Intelligence Unit survey, for example, “today’s senior executives see managing intangible assets as a major issue.

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Becoming Data Literate: Building a great business, culture and leadership through data and analytics
by David Reed
Published 31 Aug 2021

But there is a problem and a paradox – while everybody agrees on the value of data, nobody can agree how to value it. The problem lies with the accountancy profession where data is classified as an intangible asset. Historically, a broad view was taken of this category in order to account for the difference between a company’s valuation (specifically during a takeover) and its physical or monetary assets – the often sizeable gap between the two was once assigned to goodwill. From the 1980s onward, brand valuation emerged as a core intangible asset that in many cases held most of the value of a business. Accountancy standards allowed the brand to be put on the balance sheet during the course of a merger or acquisition along with other physical assets, but with one crucial difference – brands do not have their value amortised over time or across their useful economic life.

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For value creation – formal, accountancy-grade metrics for the impact of data are a high-level enabler of data’s influence and impact. The missing link is to an accounting standard for data that is acceptable to the data industry – engagement between the two parties needs to take place with a strong focus on how to measure value creation, not just as a low-grade intangible asset. For culture – removing barriers to the access and adoption of data and technology will keep the culture aligned across the organisation, thereby avoiding a two-speed enterprise in which the benefits and value from these tools is primarily gained by a small group. For data foundations – since data is fundamental to the business model of a highly data literate organisation, it goes without saying that appropriate budget and authority need to be in place for the CDO.

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Accountancy standards allowed the brand to be put on the balance sheet during the course of a merger or acquisition along with other physical assets, but with one crucial difference – brands do not have their value amortised over time or across their useful economic life. These same accounting standards also allow for data to be valued as an intangible asset in the same merger and acquisition circumstances, but in a highly reductive way as ‘customer lists’. Not only is this definition very limiting – a large proportion of the value realised by the use of data comes from non-personal data sources – but valuations are reached using one of three approaches: cost, income, market.

pages: 444 words: 86,565

Investment Banking: Valuation, Leveraged Buyouts, and Mergers and Acquisitions
by Joshua Rosenbaum , Joshua Pearl and Joseph R. Perella
Published 18 May 2009

Amortization Amortization differs from depreciation in that it reduces the value of definite life intangible assets as opposed to tangible assets. Definite life intangible assets include contractual rights such as non-compete clauses, copyrights, licenses, patents, trademarks, or other intellectual property, as well as information technology and customer lists, among others. These intangible assets are amortized according to a determined or useful life.83 Like depreciation, amortization can be projected as a percentage of sales or by building a detailed schedule based upon a company’s existing intangible assets. However, amortization is often combined with depreciation as a single line item within a company’s financial statements.

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A marginal tax rate of 35% to 40% is generally assumed for modeling purposes, but the company’s actual tax rate (effective tax rate) in previous years can also serve as a reference point.79 Depreciation & Amortization Projections Depreciation is a non-cash expense that approximates the reduction of the book value of a company’s long-term fixed assets or property, plant, and equipment (PP&E) over an estimated useful life and reduces reported earnings. Amortization, like depreciation, is a non-cash expense that reduces the value of a company’s definite life intangible assets and also reduces reported earnings.80 Some companies report D&A together as a separate line item on their income statement, but these expenses are more commonly included in COGS (especially for manufacturers of goods) and, to a lesser extent, SG&A. Regardless, D&A is explicitly disclosed in the cash flow statement as well as the notes to a company’s financial statements.

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See asset based lending facility accelerated depreciation accountants accounting accounts payable accounts receivable accretion/(dilution) analysis accretive accrued liabilities acquisition currency acquisition-driven growth acquisition financing adjusted income statement adjustments balance sheet capital expenditures capital structure changes management projections mid-year convention non-recurring items purchase price and financing structure recent events synergies year-end discounting administrative agent administrative agent fee advisor affiliate affirmative covenants Alacra all-cash transaction amortization acquisition-related intangible assets, of deferred financing fees, of term loan schedule, for term loans . See also depreciation & amortization (D&A) amortizing term loans. See also term loan A announcement earnings transaction annual report. See Form 10-K antitrust arranger asset base asset based lending (ABL) facility asset sale gains on limitations on losses on term loan prepayment transaction attorneys auction .

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The Wealth Dragon Way: The Why, the When and the How to Become Infinitely Wealthy
by John Lee
Published 13 Apr 2015

They need to see that you are overflowing with energy and enthusiasm for your chosen venture. Don't forget that intangible assets can be appreciable, too. We mostly associate intangible assets with business creation. A business in itself is—potentially—an appreciable asset, made up of assets that are tangible (your goods and equipment) and assets that are intangible (your brand, reputation, and knowledge). Intangible assets are all part of your business's value. Some intangible assets can actually be measured on a business's balance sheet—a company's brand, any patents it holds, and its goodwill (the amount another company would pay to acquire the business in excess of its actual net value) can all have value.

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Business Creation and Brand Building Does building a business sound like hard work? It is. But it is a highly effective way of creating passive income, as well as building a potentially appreciable asset. Remember that assets can be tangible or intangible. A brand is an intangible asset. Coca-Cola's huge worth is based on its brand, not the actual value of the contents of its products. Knowledge is an intangible asset. People often forget that investing in their own skills and knowledge is a good investment. What stops many people from starting a business is not knowing what business to start. Obviously it is critical to get the decision right.

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Some intangible assets can actually be measured on a business's balance sheet—a company's brand, any patents it holds, and its goodwill (the amount another company would pay to acquire the business in excess of its actual net value) can all have value. But your greatest intangible asset is…you! You are actually your most valuable asset. While you live and breathe you have unlimited potential value and an opportunity to become wealthy. And no one has more control over how wealthy you can become than you. You are your own best asset. If your house burnt down, your business went bust, the insurance didn't pay out, and you were left bankrupt, you would still have your own skills and experience. It's so easy for people to forget this after a big catastrophe.

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Blockchain: Blueprint for a New Economy
by Melanie Swan
Published 22 Jan 2014

Smart Property The blockchain can be used for any form of asset registry, inventory, and exchange, including every area of finance, economics, and money; hard assets (physical property); and intangible assets (votes, ideas, reputation, intention, health data, and information). Using blockchain technology this way opens up multiple classes of application functionality across all segments of businesses involved in money, markets, and financial transactions. Blockchain-encoded property becomes smart property that is transactable via smart contracts. The general concept of smart property is the notion of transacting all property in blockchain-based models. Property could be physical-world hard assets like a home, car, bicycle, or computer, or intangible assets such as stock shares, reservations, or copyrights (e.g., books, music, illustrations, and digital fine art).

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Please consult a qualified professional if you require financial advice. 978-1-491-92049-7 [LSI] Preface We should think about the blockchain as another class of thing like the Internet—a comprehensive information technology with tiered technical levels and multiple classes of applications for any form of asset registry, inventory, and exchange, including every area of finance, economics, and money; hard assets (physical property, homes, cars); and intangible assets (votes, ideas, reputation, intention, health data, information, etc.). But the blockchain concept is even more; it is a new organizing paradigm for the discovery, valuation, and transfer of all quanta (discrete units) of anything, and potentially for the coordination of all human activity at a much larger scale than has been possible before.

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A blockchain is quite literally like a giant spreadsheet for registering all assets, and an accounting system for transacting them on a global scale that can include all forms of assets held by all parties worldwide. Thus, the blockchain can be used for any form of asset registry, inventory, and exchange, including every area of finance, economics, and money; hard assets (physical property); and intangible assets (votes, ideas, reputation, intention, health data, etc.). The Connected World and Blockchain: The Fifth Disruptive Computing Paradigm One model of understanding the modern world is through computing paradigms, with a new paradigm arising on the order of one per decade (Figure P-1). First, there were the mainframe and PC (personal computer) paradigms, and then the Internet revolutionized everything.

pages: 1,544 words: 391,691

Corporate Finance: Theory and Practice
by Pierre Vernimmen , Pascal Quiry , Maurizio Dallocchio , Yann le Fur and Antonio Salvi
Published 16 Oct 2017

Remember that when you revalue inventories, you are decreasing future profits. 3. Intangible assets It might seem paradoxical to value intangible assets, since their liquidation value has, for a long time, been considered to be low. It is now widely acknowledged, however, that the value of a company is partly determined by the real value of its intangible assets, be they brand names, a geographical location or other advantages. The sum-of-the-parts approach makes no sense unless it takes into account the company’s intangible assets. Some noteworthy examples: Brands: particularly hard to value but the importance of brands in valuation is growing.

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When first consolidated, the identifiable assets of the new subsidiary, joint venture or associate are valued at their fair value and are recorded on the group’s balance sheet in these amounts. Intangible assets in particular are valued even if they weren’t recognised on the acquired company’s balance sheet: brands concerned, patents, software, emissions permits or landing rights, customer lists, etc. Accordingly, the equity capital of the newly consolidated company will be revalued. The difference between the price paid by the parent company for its shares in the acquired company and the parent company’s share in the revalued equity of the acquired company is called goodwill. It appears on the asset side of the new group’s balance sheet as intangible assets. This method is known as the purchase method and it gives rise to the purchase price allocation (PPA for friends and family).

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To illustrate the purchase method, let’s analyse now how Holcim accounted for the acquisition of Lafarge in 2015. Prior to the acquisition, Holcim’s balance sheet (in millions of CHF) can be summarised as follows: Intangible assets 6 238 Shareholders’ equity 19 279 Other fixed assets 20 465 Provisions 1 016 Working capital 1 046 Net debt 7 454 While Lafarge’s balance sheet (in millions of EUR) was as follows: Intangible assets 11 412 Shareholders’ equity 17 563 Other fixed assets 15 318 Provisions 674 Working capital 111 Net debt 8 604 Holcim acquired 100% of Lafarge for CHF19 483m paid for in shares (CHF18 590m) and cash (CHF893m).

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The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality
by Brink Lindsey
Published 12 Oct 2017

For publicly listed US corporations, this ratio has increased about 20 percent since 1970.5 Since a company’s market value represents the estimated present value of the income stream from its assets, a rise in Tobin’s Q means a rise in the value of intangible assets. Intangible assets can be benign in origin and may include a trusted brand name, intellectual capital that results from research and development (R&D) spending, organizational capital that results from an efficient structuring of production and management, or the human capital of key employees. But another source of intangible assets is government-created barriers to entry or special subsidies. The increase in Tobin’s Q surely reflects the increasing relative importance of intangible productive assets in the post-industrial information economy, but it may also be a warning sign of an increase in rent-seeking.

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RegData represents a modest step forward: it analyzes restrictive text strings from the Code of Federal Regulations (words like “shall,” “must,” “may not,” “permitted,” and “required”) to estimate the extent of regulation overall and in specific industries.13 James Bessen of the Boston University School of Law has used RegData to test whether rising corporate profits and Tobin’s Q values simply reflect greater investment in intangible productive assets (as measured by corporate spending on R&D, advertising, and “organizational capital”) or instead are driven by rents. Bessen found that both intangible assets and regulation are strongly associated with the rise in corporate returns and valuations since 1970. But because investments in intangible assets have decreased relative to tangible assets since 2000, Bessen concludes that rents have accounted for much of the increase in profits and Tobin’s Q values during the twenty-first century. Further, his statistical tests reject reverse causality, namely, that rising corporate returns and valuations are leading to increased regulation.14 In sum, recent trends sound a number of alarm bells that warn of a rise in rents across the US economy.

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See inequality inequality, 1–6 capitalism and, 7 folk theory of, 5 finance and, 35, 62–63 geographic, 115–23 government as source of, 11 intellectual property and, 81–84 land-use regulations and, 115–23 occupational licensing and, 103, 105–6, 108 post-New Deal, 29 prevention of through competition, 8 inflation, 2, 40, 59, 77, 111 information bias and, 136–40 deliberative politics and, 14 imbalance and, 139–40 “information spillovers” and, 114 innovation, 6 concentration of industry and, 20 copyright/patent law and, 64–65, 71–75, 167, 193n8 efficiency and, 16 financial sector, 42 growth rate and, 24–25, 186n15 profits and, 19 regulatory capture and, 17 scarcity of, 16 total factor productivity and, 78–79 institutional bias, 147–48, 170, 175 institutional weakness, 8–9 intangible assets, 19–20, 23 intellectual capital, 20 intellectual property, 64–89. See also copyright/patent law benefits of protecting, 64–65 concentrated benefits and, 131 costs of expansion of, 75–81 digital era and, 70–71 European views on, 65, 76, 195n32 information imbalance and, 139–40 institutional bias and, 149 market failure and, 68–69, 74 monopolies and, 85 morality of, 84–89, 195n32 policy image and, 141–45 rent-seeking and, 64 interest rates, 40, 51–54, 59 International Monetary Fund (IMF), 60 Internet.

pages: 523 words: 111,615

The Economics of Enough: How to Run the Economy as if the Future Matters
by Diane Coyle
Published 21 Feb 2011

As Amartya Sen put it: “The moral and legal responsibilities associated with transactions have in recent years become much harder to trace, thanks to the rapid development of secondary markets involving derivatives and other financial instruments.”4 This loss of traceability and trust is a serious matter. Apart from their buildings and computers, banks have no physical assets. Their stock market value is entirely an indicator of their intangible assets—which are, more or less, a measure of the extent to which they are trusted. Until the later part of the twentieth century, other companies had a market valuation that mostly reflected the value of physical assets, such as factories and machines, but a growing share of the value of all companies in recent decades has consisted of intangible items, including the important asset described as “goodwill.”

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Bureau of Economic Analysis (BEA), which has often been at the forefront of practical statistical innovation, announced that it was exploring the feasibility of the experimental compilation of intangibles statistics in a “satellite account,” which would offer a comprehensive framework for assessing this form of value in the economy. This satellite would include human capital, the knowledge captured in computer databases and creative property such as movies and music, brand values and “organizational capital” for example.21 The aim of the work is to measure investment in intangible assets, but the BEA’s report notes that the main barrier is the absence of the underlying measurements—for example, businesses don’t record “investment in organizational capital” in their management accounts, so they can’t answer questions about it in BEA surveys. And as the statisticians observe, the absence of measurements indicates that the concepts currently applied to the idea of intangible investment are fuzzy.

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See also psychology Bell, Daniel, 230, 235–36 Bentham, Jeremy, 31 Berlin Wall, 182, 226, 239 Bhutan, Kingdom of, 40 Biswas–Diener, Robert, 48 Blackberry phones, 205 black markets, 225 Blake, William, 27 Blinder, Alan, 133, 224 Blueprint for a Safer Planet (Stern), 29 Bono, 194–96, 308n13 bonuses: bankers and, 87–88, 115, 139, 143–44, 193, 221, 223, 277–78, 295; as essential, 88; halting of, 278; lobbyists and, 87–88; penal tax on, 278; policy recommendations for, 277–79, 295–96; reform and, 295 boom–bust cycles, 4, 277, 280, 283; fairness and, 136–37; happiness and, 22, 28; posterity and, 93, 102, 106–9; trust and, 145, 147; values and, 213, 222–23, 233 Booth, Charles, 131 Boskin Commission, 37 Bové, José, 27 Bowling Alone (Putnam), 140–41 Boyle, James, 196 Brazil, 63, 65, 123 BRICs (Brazil, Russia, India, and China), 123, 160, 164, 176–77 British National Health Service, 247 British Social Attitudes, 140–41 Bronk, Richard, 28 Brown, Gordon, 93 Brundtlandt Report, 77 bubbles, 3, 26, 223, 228, 301n1 Buchanan, James, 220, 242 Bundesbank, 99 Burry, Michael, 86 Bush, George W., 127–28 Calculus of Consent, The: Logical Foundations of Constitutional Democracy (Buchanan and Tullock), 242 call centers, 131, 133, 161 Cameron, David, 288 capitalism: China and, 234; communism and, 96, 182–83, 209–13, 218, 226, 230, 239–40; community and, 27, 51, 65, 117–18, 137, 141, 152–54; cultural effects of, 25–29, 230–38; current crisis of, 6–9; democracy and, 230–38; Engels on, 14; fairness and, 134, 137, 149; growth and, 268, 275, 290, 293, 297; happiness and, 25–29, 33, 45, 53–54; historical perspective on, 3, 6, 14; institutions and, 240; market failure and, 226–30; Marx on, 14; measurement and, 182; mercantile economy and, 27–28; nutrition and, 10; profit–oriented, 18; Protestant work ethic and, 13–14; protests against, 211–13; rethinking meaning of, 9; social effects of, 25–26; values and, 209–13, 218, 226, 230–32, 235–36; well-being and, 137–39 carbon prices, 70–71 celebrities, 33 charitable giving, 33, 141 Checkpoint Charlie, 147 China, 161, 262, 280; capitalism and, 234; carbon emissions and, 63; changed demographic structure of, 90; convergence and, 122; declining population in, 98; energy use in, 63, 65; global manufacturing and, 149; inequality and, 125–26; Mao and, 10; middle class of, 125–26; as next major power, 94; one–child policy and, 95–96; population growth and, 95–96; purchasing power parity (PPP) and, 306n19; rise in wealth of, 81, 122–23, 125, 212; savings and, 87, 94, 100, 108; wage penalties and, 133; World Bank influence and, 163 cities, 308n29; face-to-face contact and, 165–68; size and, 165–66; structural changes in, 165–70; urban clustering and, 166 City of London, 147, 221 Clemens, Michael, 81 climate change, 5–7, 17, 24, 90, 238; carbon prices and, 70–71; Copenhagen summit and, 62, 64–65, 68, 162, 292; domestic dissent and, 66–71; future and, 75–83; geological history and, 69; global warming and, 57, 64, 66, 68; greenhouse gases and, 23, 29, 35, 59, 61–63, 68, 70–71, 83; Himalayan glaciers and, 66–67; incandescent light bulbs and, 59–60; InterAcademy Council and, 66–67; Intergovernmental Panel on Climate Change (IPCC) and, 59, 66–69, 82, 297; Kyoto Protocol and, 62–64; lack of consensus on, 66–71; Montreal Protocol and, 59; policy dilemma of, 58–62; policy recommendations for, 267, 280, 297; politics and, 62–65; social welfare and, 71–75; technology and, 59–60, 198 Coachella Value Music Festival, 197 Cobb, John, 36 Coca Cola, 150 coherence, 49 Cold War, 93, 112, 147, 209, 213, 239, 252 Collier, Paul, 77–78, 80, 82 Commerzbank, 87 Commission on the Measurement of Economic Performance and Social Progress, 37–38 communism: Berlin Wall and, 182, 226, 239; capitalism and, 96, 182–83, 209–13, 218, 226, 230, 239–40; Cold War and, 93, 112, 147, 209, 213, 239, 252; fall of, 209–13, 226, 239–40, 252; Iron Curtain and, 183, 239, 252; Leipzig marches and, 239; one-child policy and, 95–96; Velvet Revolution and, 239 community: civic engagement and, 140–41; globalization and, 148–49; intangible assets and, 149–52, 157, 161 (see also trust); public service and, 295; Putnam on, 140–41, 152–54 commuting, 45–47 Company of Strangers, The (Seabright), 148–49, 213–14 comprehensive wealth, 81–82, 202–3, 208, 271–73 consumerism, 22, 34, 45, 138 consumption: conspicuous, 11, 22, 45, 236; consumerism and, 22, 34, 45, 138; cutting, 61; downgrading status of, 11; downshifting and, 11, 55; Easterlin Paradox and, 39–44; global per capita, 72; of goods and services, 7, 10, 24, 35–36, 40, 82, 99, 161, 188, 191, 198, 214, 218, 228–29, 282; green lifestyle and, 55, 61, 76, 289, 293; growth and, 280, 295; happiness and, 22, 29, 40, 45; hedonic treadmill and, 40; increasing affluence and, 12; institutions and, 254, 263; Kyoto Protocol and, 63–64; measurement and, 181–82, 198; missing markets and, 229; natural resources and, 8–12, 58, 60, 79–82, 102, 112, 181–82; nature and, 58–61, 71–76, 79, 82; posterity and, 86, 104–5, 112–13; reduction of, 105; Slow Movement and, 27; trends in, 138; trilemma of, 13–14, 230–36, 275; values and, 229, 236 convergence, 5, 122 Copenhagen summit, 62, 64–65, 68, 162, 292 Crackberry, 205 Crafts, Nicholas, 156–57 credit cards, 2, 21, 136, 138, 283 Csikszentmilhalyi, Mihaly, 45–49 Cultural Contradictions of Capitalism, The (Bell), 230, 235–36 Czechoslovakia, 239 Daly, Herman, 36 Damon, William, 48 Dasgupta, Partha, 61, 73, 77–78, 80, 82 David, Paul, 156 Dawkins, Richard, 118 debit cards, 2 decentralization, 7, 159, 218, 246, 255, 275, 291 defense budgets, 93 democracy, 2, 8, 16, 312n19; capitalism and, 230–38; culture and, 230–38; fairness and, 141; growth and, 268–69, 285–89, 296–97; institutions and, 242–43, 251–52, 262; nature and, 61, 66, 68; posterity and, 106; trust and, 175; values and, 230–35 Denmark, 125 Dickens, Charles, 131 Diener, Ed, 48, 49 Discourse on the Origin and Basis of Inequality among Men (Rousseau), 114 distribution, 29, 306n22; Asian influence and, 123; bifurcation of social norms and, 231–32; consumerism and, 22, 34, 45, 138; Easterlin Paradox and, 39–44; fairness and, 115–16, 123–27, 134, 136; food and, 10, 34; of goods and services, 7, 10, 24, 35–36, 40, 82, 99, 161, 188, 191, 198, 214, 218, 228–29, 282; income, 34, 116, 123–27, 134, 278; inequality and, 123 (see also inequality); institutions and, 253; measurement and, 181, 191–99, 202; paradox of prosperity and, 174; policy recommendations for, 276, 278; posterity and, 87, 94; trust and, 151, 171; unequal countries and, 124–30; values and, 226 Dorling, Danny, 224, 307n58, 308n34 Douglas, Michael, 221 downshifting, 11, 55 downsizing, 175, 246, 255 drugs, 44, 46, 137–38, 168–69, 191, 302n47 Easterlin, Richard, 39 Easterlin Paradox, 39–44 eBay, 198 Economics of Ecosystems and Biodiversity project, The (TEEB), 78–79 economies of scale, 253–58 Economy of Enough, 233; building blocks for, 12–17; first ten steps for, 294–98; growth and, 182; happiness and, 24; institutions and, 250–51, 258, 261–63; living standards and, 13, 65, 78–79, 106, 113, 136, 139, 151, 162, 190, 194, 267; Manifesto of, 18, 267–98; measurement and, 182, 186–88, 201–7; nature and, 59, 84; Ostrom on, 250–51; posterity and, 17, 85–113; values and, 217, 233–34, 238; Western consumers and, 22 (see also consumption) Edinburgh University, 221 efficiency, 2, 7; evidence–based policy and, 233–34; fairness and, 126; Fama hypothesis and, 221–22; happiness and, 9, 29–30, 61; institutions and, 245–46, 254–55, 261; limits to, 13; nature and, 61–62, 69, 82; network effects and, 253, 258; productivity and, 13 (see also productivity); trilemma of, 13–14, 230–36, 275; trust and, 158–59; values and, 210, 215–16, 221–35 Ehrlich, Paul, 70 e-mail, 252, 291 “End of History, The” (Fukuyama), 239 Engels, Friedrich, 14 Enlightenment, 7 Enron, 145 environmentalists.

Buy Then Build: How Acquisition Entrepreneurs Outsmart the Startup Game
by Walker Deibel
Published 19 Oct 2018

Current assets include very liquid items like cash and equivalents, any marketable securities, accounts receivable, inventory, and prepaid expenses. 136 Long-term assets reflect assets owned by the company that are harder to convert into cash—items like illiquid investments; fixed assets like buildings, land, or the widget-making machine example above; as well as accumulated depreciation and intangible assets. Intangible assets include things like software that was developed by the company, patents or certain intellectual property, and goodwill. Let’s unpack a few of these terms. DEPRECIATION Depreciation is an accounting tool that allows companies to devalue assets over their useful life. Let’s take the widget-making machine example above.

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Instead, you, as an acquisition entrepreneur, will be looking to acquire a company’s infrastructure only so far as its ability to generate cash flow. GOODWILL Goodwill is an intangible asset that represents the value over and above the value of the hard assets. For example, let’s say a drop-shipping based, eCommerce company with no real estate, inventory, or assets of any kind generates $250,000 in earnings every year for the owner. When the company is bought for $800,000 (3.2 multiple on $250,000), where is the value booked? In goodwill. Goodwill can also be referred to as a “customer list” or any other intangible asset name that was acquired at a premium over asset value. LIABILITIES Liabilities headline the right side of the balance sheet and outline what the company owes.

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If your car is worth $35,000 January 1st and $27,000 on December 31st of the same year, you didn’t actually spend the difference, you just lost value. The IRS allows this depreciation to be subtracted as an expense from the net income so that you do not need to pay taxes on those dollars that were invested in the equipment in the first place. Amortization works the same as depreciation but is applied to intangible assets like goodwill. So, you can actually take depreciation and amortization and add it back to net earnings to discover the cash generated in addition to what’s reported on net income. Principal payments paid on debt, however, 142 are not expensed by a company. A business with interest payments will clearly have principal payments as well.

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The Einstein of Money: The Life and Timeless Financial Wisdom of Benjamin Graham
by Joe Carlen
Published 14 Apr 2012

According to its preface, the purpose of the book is to enable one to read the financial statements of a business “intelligently”52 so that one becomes “better equipped to gauge its future possibilities.”53 For example, when discussing the potentially misleading reporting of a company's intangible assets (i.e., nonphysical resources such as goodwill, intellectual property, etc.), Graham writes that “little if any weight should be given to the figures at which intangible assets appear on the balance sheet.”54 Instead, Graham counseled that “it is the earning power of these intangibles, rather than their balance sheet valuation, that really counts.”55 Similarly, Graham assails corporate reporting of property values (“the same misleading results which were obtained before the war by overstating property values are now sought by the opposite stratagem of understating these assets”56), the “book value” item on the balance sheet, meant to represent the value of all of the assets available for the security in question (“if the company were actually liquidated the value of the assets would most probably be much less than the book value [of the stock]”57), reported earnings figures (“look out for booby traps in the per-share [earnings] figures”58), and more.

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According to its preface, the purpose of the book is to enable one to read the financial statements of a business “intelligently” so that one is “better equipped to gauge its future possibilities.”30 The Interpretation of Financial Statements is packed with the discerning analytical wisdom associated with Graham. For example, when discussing the potentially misleading reporting of a company's intangible assets, Graham writes: “In general, it may be said that little if any weight should be given to the figures at which intangible assets appear on the balance sheet…. It is the earning power of these intangibles, rather than their balance sheet valuation, that really counts.”31 He also warns against overly simplistic methods of stock selection and encourages a full analysis of all relevant metrics.

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fixed charges: Expenses that recur consistently as part of the regular course of business (e.g., insurance payments, loan payments, etc.). goodwill: Unlike such tangible assets such as cash or inventory, goodwill is a balance-sheet item that represents intangible assets such as brand-name recognition, strength of client (or supplier) relationships, and the like. intangible assets: Nonphysical resources such as goodwill, intellectual property, and so forth. liquidity: The extent to which an asset can be converted, both quickly and wholly (i.e., without a price discount), to its cash equivalent. long-term debt: Loans and financial obligations due in over one year.

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Big Data: A Revolution That Will Transform How We Live, Work, and Think
by Viktor Mayer-Schonberger and Kenneth Cukier
Published 5 Mar 2013

The difference between a company’s book value and its market value is accounted for as “intangible assets.” It has grown from around 40 percent of the value of publicly traded companies in the United States in the mid-1980s to three-fourths of their value at the dawn of the new millennium. This is a hefty divergence. These intangible assets are considered to include brand, talent, and strategy—anything that’s not physical and part of the formal financial-accounting system. But increasingly, intangible assets are coming to mean the data that companies hold and use, too. Ultimately, what this shows is that there is currently no obvious way to value data.

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Meanwhile, investors will also start to take notice of the option value of data. Share prices may swell for companies that have data or can collect it easily, while others in less fortunate positions may see their market valuations shrink. The data does not have to formally show up on the balance sheets for this to happen. Markets and investors will price these intangible assets into their valuations—albeit with difficulty, as the seesawing of Facebook’s share price in its first few months attests. But as accounting quandaries and liability concerns are alleviated, it is almost certain that the value of data will show up on corporate balance sheets and emerge as a new asset class.

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Samek, “Prepared Testimony: Hearing on Adapting a 1930’s Financial Reporting Model to the 21st Century,” U.S. Senate Committee on Banking, Housing and Urban Affairs, Subcommittee on Securities, July 19, 2000. Value of intangibles—Robert S. Kaplan and David P. Norton, Strategy Maps: Converting Intangible Assets into Tangible Outcomes (Harvard Business Review Press, 2004), pp. 4–5. [>] Tim O’Reilly quotation—Interview with Cukier, February 2011. 7. Implications [>] Info on Decide.com—Cukier email exchange with Etzioni, May 2012. [>] McKinsey report—James Manyika et al., “Big Data: The Next Frontier for Innovation, Competition, and Productivity,” McKinsey Global Institute, May 2011 (http://www.mckinsey.com/insights/mgi/research/technology_and_innovation/big_data_the_next_frontier_for_innovation), p. 10.

Principles of Corporate Finance
by Richard A. Brealey , Stewart C. Myers and Franklin Allen
Published 15 Feb 2014

But often the largest investments involve the acquisition of intangible assets. For example, U.S. banks invest about $10 billion annually in new IT projects. Much of this expenditure goes to intangibles such as system design, programming, testing, and training. Think also of the huge expenditure by pharmaceutical companies on research and development (R&D). Merck, one of the largest pharmaceutical companies, spent $11 billion on R&D in 2010. The R&D cost of bringing one new prescription drug to market has been estimated at $800 million. Expenditures on intangible assets such as IT and R&D are investments just like expenditures on new plant and equipment.

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Notice that debt ratios make use of book (i.e., accounting) values rather than market values.14 The market value of the company finally determines whether the debtholders get their money back, so you might expect analysts to look at the face amount of the debt as a proportion of the total market value of debt and equity. On the other hand, the market value includes the value of intangible assets generated by research and development, advertising, staff training, and so on. These assets are not readily salable and, if the company falls on hard times, their value may disappear altogether. For some purposes, it may be just as good to follow the accountant and ignore these intangible assets. This is what lenders do when they insist that the borrower should not allow the book debt ratio to exceed a specified limit. Notice also that these measures of leverage ignore short-term debt.

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First, the true values of B’s tangible assets—its working capital, plant, and equipment—may be greater than $10 million. We will assume that this is not the reason; that is, we assume that the assets listed on its balance sheet are valued there correctly.18 Second, A Corporation may be paying for an intangible asset that is not listed on B Corporation’s balance sheet. For example, the intangible asset may be a promising product or technology. Or it may be no more than B Corporation’s share of the expected economic gains from the merger. A Corporation is buying an asset worth $18 million. The problem is to show that asset on the left-hand side of AB Corporation’s balance sheet.

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Security Analysis
by Benjamin Graham and David Dodd
Published 1 Jan 1962

First, Mohawk had been growing by acquiring some of the smaller players as part of an industrywide consolidation, so it gained economies of scale that allowed the company to reduce capital spending and lower its working capital needs. Even more important, the use of GAAP required Mohawk to take significant charges against its earnings to amortize the intangible assets it had picked up in its buying spree. (The difference between what a company pays for an acquisition and the acquired company’s book value goes on the balance sheet as an intangible asset called “goodwill.”) These charges reduced net income but did not take any cash out of the business. All told, we calculated that Mohawk was selling at less than seven times its free cash flow, an attractive valuation.

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Investment initiatives—whether new products, new store openings, or brand launches—are almost always based on detailed business plans. These plans identify the costs of such initiatives with reasonable accuracy and the benefits more fancifully. Investors can use these data to estimate the cost of producing intangible assets. Industry managers with substantial experience will be able to estimate such costs. More importantly, many intangible assets trade just like real property. Cable franchises, clothing brands, new drug discoveries, store chains, and even music labels are bought by sophisticated buyers (usually larger companies) from sophisticated sellers (usually smaller companies).

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Then we add back noncash charges such as depreciation and amortization, which are formulaic calculations based on historical costs (depreciation for tangible assets, amortization for intangibles) and may not reflect a reduction in those assets’ true worth. Even so, most assets deteriorate in value over time, and we have to account for that. So we subtract an estimate of the company’s cost of maintaining tangible assets such as the office, plant, inventory, and equipment; and intangible assets like customer traffic and brand identity. Investment at this level, properly deployed, should keep the profits of the business in a steady state. That is only the beginning. For instance, companies often misstate the costs of employees’ pension and postretirement medical benefits. They also overestimate their benefit plans’ future investment returns or underestimate future medical costs, so in a free cash flow analysis, you need to adjust the numbers to reflect those biases.

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The Great Tax Robbery: How Britain Became a Tax Haven for Fat Cats and Big Business
by Richard Brooks
Published 2 Jan 2014

It was tearing itself apart in pursuit of tax avoidance. ‌5 ‌Breaking Up Isn’t Hard to Do The companies that carve themselves up and send the pieces round the world for tax avoidance Multinational enterprises have long understood that the most valuable things they possess are often not the bricks, mortar and machinery of their physical operations but their intangible assets: their know-how, patents, trademarks and brands. The profits to be made from a drug, for example, drop like a stone when a patent expires and ownership of the formula behind it lapses. Well-known breakfast cereals sell for a great deal more than ‘brand X’ not just because of the crappy toys inside the box. With the growth of international trade in the twentieth century, such intangible assets could be increasingly turned to profit not just in their country of development but across in the world.

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Rights, patents, trademarks, licences, sub-licences and much else could be transplanted at the stroke of a lawyer’s pen to companies in low-tax areas that would receive payments for allowing related companies in ‘normal’ tax rate countries to use their new ‘intangible’ assets. And the international rules of the game – drawn up without foreseeing a time when multinationals would break themselves up for tax avoidance – dictated that the tax results of these arrangements must be respected. For British multinationals there remained a major hurdle to overcome. The same 1984 ‘controlled foreign companies’ laws that tackled British multinationals diverting financing income into tax haven subsidiaries applied equally to the parking of intangible assets in such offshore companies. In the same way that they couldn’t stuff these companies with interest payments reducing taxable profits in countries with normal tax rates, neither could they use them as receptacles for royalties or other fees.

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The concept was refined when the body set up to administer the United States’ Marshall Plan for the post-war reconstruction of Europe – what is now the Organization for Economic Cooperation and Development (OECD) – effectively became the custodian of the rules of international taxation (as before, smoothing out the wrinkles in international taxation was recognized as an important pillar of a stable world economic order).‌3 Crucially, in its 1963 ‘model’ taxation treaty, on which countries would base their bilateral agreements, the OECD made a point of ensuring that transfer prices must reflect the value of intangible assets such as patents and trademarks. This was logical: independent parties did indeed pay royalties for using such assets, the legal protections for which were also being strengthened across the world (making them still more valuable). Or the prices paid commercially for goods reflected the technology, know-how and brands that had gone into making and marketing them.

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Don't Be Evil: How Big Tech Betrayed Its Founding Principles--And All of US
by Rana Foroohar
Published 5 Nov 2019

And they don’t have entire business models built on selling and monetizing data. But they do leverage data to increase their return on investment. It’s telling that the fastest way to become one of those top 10 percent of companies holding 80 percent of corporate wealth is to figure out how to leverage not physical assets or even capital, but the value of “intangible” assets, including data, patents, intellectual property, and networks. Companies in every industry are counting on such electronic data to spur growth over the next several years. Data-driven artificial intelligence could generate up to almost $6 trillion in revenues for companies that deploy it successfully.

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Among this group, the top 10 percent (the “superstar” companies) take 80 percent of economic profits—defined as a company’s invested capital multiplied by its returns above the cost of that capital. The top 1 percent alone take 36 percent of the pie.32 We already know who some of the top 10 percent are—they include high-margin Big Tech companies (Facebook, Apple, Amazon, and Google), as well as a number of others who have been able to exploit the value of intangible assets such as software, data, patents, and brands (these would include not just technology firms but also a good number of financial, biotech, and pharmaceutical companies). We also know that the network effect allows such companies to capture markets quickly and at scale, giving them what’s known in the start-up world as the “first scaler advantages.”

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The key point is that users beget users, which allows the players who can grab the most market share quickly to dominate entire industries seemingly overnight. This is not unique to Google, as we’ve seen. But it is much easier these days to grab market share if you are big, and can leverage data and intellectual property across networks. These intangible assets can scale far, far faster and further than the products and services of old.33 Networked businesses are case studies in how what goes big, goes bigger still. But as Varian and Carl Shapiro acknowledge, there’s a dark side to the feedback loop: “Positive feedback [within platforms] also makes the weak get weaker.”

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The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated
by Gautam Baid
Published 1 Jun 2020

Only a few rare businesses enjoy excess returns for many years by creating structural competitive advantages or economic moats. An extended period of excess returns increases business value. Competitive advantages stem from various sources, including intangible assets, such as brands, patents, and licenses; switching costs; network effects; or low-cost advantages. Intangible Assets Some brands are ubiquitous and widely trusted. Think Budweiser, Tide, and Maggi. They lower search costs for consumers and offer psychological advantages. They make prospective customers switch from a system 2 type of slow, reasoned, reflective thinking to a system 1 type of fast, automatic, reflexive thinking through mental association and Pavlovian conditioning.

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The higher this ratio is, the better. A company should earn more on its tangible assets (as well as tangible equity and capital employed) than the bank’s fixed deposit rate. Pretax return on tangible equity. The higher the pretax return is, the better. Tangible equity is calculated by subtracting intangible assets and preferred equity from the company’s book value. Be cautious of companies for which the high return on equity figure is being primarily driven by higher leverage. Return on capital employed. The higher this return is, the better. This is calculated as earnings before interest and taxes, divided by capital employed. 4.

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Great businesses are those with an ever-increasing stream of earnings with virtually no major capital requirements. They produce extraordinarily high returns on incremental invested capital. The truly great businesses are literally drowning in cash all the time. They tend to earn infinitely high return on capital as they require little tangible capital to grow and are driven by intangible assets such as a strong brand name with “share of mind,” intellectual property, or proprietary technology. Great businesses typically are characterized by negative working capital, low fixed asset intensity, and real pricing power. Negative working capital means that customers are paying the company cash up front for goods or services that will be delivered at a later date.

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Fall: The Mysterious Life and Death of Robert Maxwell, Britain's Most Notorious Media Baron
by John Preston
Published 9 Feb 2021

MCC’s shares, the column concluded, were basically worthless. Far from being in profit, the company was running at a considerable loss. The moment he read this, Maxwell sprang into action, complaining the article was ‘irresponsible and impermissible’. For a start, it made no mention of MCC’s numerous ‘intangible assets’. As their name suggests, intangible assets – things like brand value or intellectual property – have no physical substance. Although you may not be able to see or feel them, they can greatly affect a company’s fortunes. But, because of their nature, putting a value on intangibles is a notoriously subjective business.

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Scott Fitzgerald, The Great Gatsby Contents Cover Title Page Dedication Epigraph List of Plates Preface: The King of New York 1.The Salt Mine 2.Out of the Darkness 3.An Adventurer of Great Style 4.Difficulties With Pork 5.Mortality 6.Down on the Bottom 7.The Man Who Gets Things Done 8.Roast Beef and Yorkshire Pudding 9.Robert Maxwell’s Code of Conduct 10.The Lights Go Out 11.The Grasshopper Returns 12.Strife 13.Written in the Stars 14.Madness 15.In the Lair of the Black Bear 16.An Enormous Spread 17.A Very Happy Person 18.Battle Rejoined 19.Homecomings 20.The Party of the Decade 21.Listening In 22.A Glorious New Dawn 23.Crossing the Line 24.Obsessed 25.Three Departures 26.What Have I Done to Deserve That? 27.Intangible Assets 28.Légumes du Maurier 29.Selling the Crown Jewels 30.Don’t You Worry About a Thing 31.Hurricane Bob 32.A Long Way Down 33.Lost 34.Found 35.The First Autopsy 36.A Hero of Our Time 37.The Second Autopsy 38.The Four Horsemen 39.Everything Must Go 40.The March of Time 41.Curtain Call 42.A True Scotsman Acknowledgements A Note on Sources Index Photo Section About the Author Copyright About the Publisher List of Plates here Maxwell being presented with the Military Cross by Field-Marshal Montgomery in March 1945.

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This time Maxwell told her to meet him in Lesbos – a day’s sail away. Off she went once more, but he never showed up there either. For a fourth time she tried. He would definitely be waiting for her in Ephesus on the Turkish coast, Maxwell said. The yacht duly set sail. He never appeared. 27. Intangible Assets Maxwell Communications Press Information. 4 June 1990. MAXWELL INSTITUTE TO BOOST PEACE The Gorbachev–Maxwell Institute of Technology was launched in America yesterday by Soviet President Mikhail Gorbachev. The Institute of Global Technology will be an international centre for American, Soviet and European scientists and engineers to conduct research into problems ranging from food and health to global warming and communication.

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Race Against the Machine: How the Digital Revolution Is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy
by Erik Brynjolfsson
Published 23 Jan 2012

—John Maynard Keynes, 1930 The individual technologies and the broader technological acceleration discussed in Chapter 2 are creating enormous value. There is no question that they increase productivity, and thus our collective wealth. But at the same time, the computer, like all general purpose technologies, requires parallel innovation in business models, organizational processes structures, institutions, and skills. These intangible assets, comprising both organizational and human capital, are often ignored on companies’ balance sheets and in the official GDP statistics, but they are no less essential than hardware and software. And that’s a problem. Digital technologies change rapidly, but organizations and skills aren’t keeping pace.

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You don’t have to be an ardent Keynesian to believe that the best time to make these investments is when there is plenty of slack in the labor market. 11. Increase funding for basic research and for our preeminent government R&D institutions including the National Science Foundation, the National Institutes of Health, and the Defense Advanced Research Projects Agency (DARPA) with a renewed focus on intangible assets and business innovation. Like other forms of basic research, these investments are often underfunded by private investors because of the spillovers they create. Laws, Regulations, and Taxes 12. Preserve the relative flexibility of American labor markets by resisting efforts to regulate hiring and firing.

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The Essays of Warren Buffett: Lessons for Corporate America
by Warren E. Buffett and Lawrence A. Cunningham
Published 2 Jan 1997

It is recorded as an asset on the balance sheet and then amortized as an annual expense, usually 24 CARDOZO LAW REVIEW [Vol. 19:1 over forty years. So the accounting goodwill assigned to that business decreases over time by the aggregate amount of that expense. Economic goodwill is something else. It is the combination of intangible assets, like brand name recognition, that enable a business to produce earnings on tangible assets, like plant and equipment, in excess of average rates. The amount of economic goodwill is the capitalized value of that excess. Economic goodwill tends to increase over time, at least nominally in proportion to inflation for mediocre businesses, and more than that for businesses with solid economic or franchise characteristics.

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In 1972 (and now) relatively few businesses could be expected to consistently earn the 25% after tax on net tangible assets that was earned by See's-doing it, furthermore, with conservative accounting and no financial leverage. It was not the fair market value of the inventories, receivables or fixed assets that produced the premium rates of return. Rather it was a combination of intangible assets, particularly a pervasive favorable reputation with consumers based upon countless pleasant experiences they have had with both product and personnel. Such a reputation creates a consumer franchise that allows the value of the product to the purchaser, rather than its production cost, to be the major determinant of selling price.

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Should the investor impute a $2 per share amortization charge annually ($80 divided by 40 years) to calculate "true" earnings per share? And, if so, should the new "true" earnings of $3 per share cause him to rethink his purchase price? * * * * * We believe managers and investors alike should view intangible assets from two perspectives: (1) In analysis of operating results-that is, in evaluating the underlying economics of a business unit-amortization charges should be ignored. What a business can be expected to earn on unleveraged net tangible assets, excluding any charges against earnings for amortization of Goodwill, is the best guide to the economic attractiveness of the operation.

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The End of Power: From Boardrooms to Battlefields and Churches to States, Why Being in Charge Isn’t What It Used to Be
by Moises Naim
Published 5 Mar 2013

Economic and Social Commission for Asia and the Pacific Monograph Series on Managing Globalization: Regional Shipping and Port Development Strategies (Container Traffic Forecast), 2011. 26. David Goldman, “Microsoft’s $6 Billion Whoopsie,” CNNMoney, July 12, 2012, http://money.cnn.com/2012/07/02/technology/microsoft-aquantive/index.htm. 27. Thom and Greif, “Intangible Assets in the Valuation Process: A Small Business Acquisition Study”; Galbreath, “Twenty-First Century Management Rules: The Management of Relationships as Intangible Assets.” 28. Interview with Lorenzo Zambrano, Monterrey, Mexico, 2011. 29. See The Gap Inc. and Inditex annual reports from 2007 to 2011. 30. Data obtained from Zara’s corporate website: http://www.inditex.com/en/who_we_are/timeline. 31.

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And some companies still have an immense advantage due to their access to desired assets: for instance, the Russian mining mammoth Norilsk controls 30 percent of the world’s known nickel reserves and 45 percent of its platinum in Siberia. But even within these industries, the increasing importance of intangible assets holds true. Lorenzo Zambrano, the CEO of CEMEX, a Mexican cement company that has broken into the industry’s top ranks and become a global player, told me that “knowledge management” was the crucial factor behind his company’s ability to compete internationally with larger, more established rivals.

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New York: Farrar, Straus & Giroux, 2005. Frydman, Carola, and Raven E. Sacks. “Executive Compensation: A New View from a Long-Term Perspective, 1936–2005,” FEDS Working Paper No. 200735, July 2007. Galbreath, Jeremy. “Twenty-First Century Management Rules: The Management of Relationships as Intangible Assets.” Management Decision 40, no. 2 (2002). Gammeltoft, Peter. “Emerging Multinationals: Outward FDI from the BRICS Countries.” International Journal of Technology and Globalization 4, no. 1 (2008). Ghemawat, Pankaj. World 3.0: Global Prosperity and How to Achieve It. Boston, MA: Harvard Business Review Press, 2011.

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The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion
by John Hagel Iii and John Seely Brown
Published 12 Apr 2010

Because big institutions need us more than ever. Making money from intangible assets—from knowledge, brand, and other nonphysical sources of value—is the primary way corporations make profit these days.4 Many analysts have noted the increasing importance of intangible assets in business, but people often think about these assets in static form—for example, stocks of knowledge, established brands, and existing relationships. It is the growing pressure in the Big Shift to refresh these assets more frequently that makes institutions increasingly dependent on the individuals who create new intangible assets by interacting and collaborating with others.

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See Jake von Slatt, “Gas Mask Sawdust Respirator,” Steampunk Workshop, http://steampunkworkshop.com/respirator.shtml. 14 Luke Plunkett, “Americans Spent 2008 Playing World of Warcraft, PlayStation 2 Games,” Kotaku, January 1, 2009, http://kotaku.com/5121962/americans-spent-2008-playing-world-of-warcraft-playstation-2-games#c. 15 Douglas Thomas, “Scalable Learning: From Simple to Complex in World of Warcraft,” On the Horizon 17, no. 1 (2009): 35-46 16 Ibid. 17 See, for instance, Wesley Yin-Poole, “French WoW Player Reaches Level 70 in 28 Hours,” Videogamer.com, January 17, 2007, http://www.videogamer.com/news/french_wow_player_reaches_level_70_in_28_hours.html. 18 SAP has more than 121,000 installed systems today. 19 Conversation with authors, October 2008. 20 Greg Noll, Riding Giants. 21 Matt Higgins, “Rough Waves, Tougher Beaches,” New York Times, January 22, 2009, http://www.nytimes.com/2009/01/23/sports/othersports/23surfing.html?_r=1. Chapter 5 1 Ellen Levy, interview with authors, September 20, 2009. 2 Ibid. 3 Ibid. 4 For more about how monetizing intangible assets drives corporate wealth creation, see Lowell Bryan and Claudia Joyce, Mobilizing Minds (New York: McGraw-Hill, 2007). 5 See John Hagel III, John Seely Brown, and Lang Davison, The 2009 Shift Index: Measuring the Forces of Long-Term Change (San Jose, Calif.: Deloitte Development, June 2009). 6 Andrew Keen, The Cult of the Amateur: How Today’s Internet Is Killing Our Culture (New York: Broadway Business, 2007). 7 Ian Millhiser, “Clarence Thomas’s America,” Huffington Post, April 14, 2009, http://www.huffingtonpost.com/ian-millhiser/clarence-thomas-america_b_186425.html. 8 Clay Shirky, “Newspapers and Thinking the Unthinkable,” blog posting, March 13, 2009, http://www.shirky.com/weblog/2009/03/newspapers-and-thinking-the-unthinkable/. 9 Matthew B.

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The End of Ownership: Personal Property in the Digital Economy
by Aaron Perzanowski and Jason Schultz
Published 4 Nov 2016

Importantly, not all intangible resources fall under the IP umbrella. Interests in debts, securities, and government franchises—think liquor licenses or taxi medallions—all concern intangible assets rather than tangible objects, but they aren’t regulated by IP law. Likewise, we can think of assets like digital currencies and virtual objects—a powerful weapon in your favorite video game, for example—in terms of property. The rules surrounding these relatively new intangible assets remain largely undefined.16 Digital objects don’t easily fit into either the IP or the personal property frameworks. Consider a digital movie you purchase from Apple.

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And your Netflix subscription doesn’t give you a property interest—personal, intellectual, or intangible—in the movies you watch. But when you pay a one-time fee for a copy of, or permanent access to, an ebook, game, or other digital media, that should be recognized as a sale that transfers ownership of a tangible or intangible asset. Courts struggle to define and identify sales in large part because they can’t decide whether to rely on the privately drafted declarations of copyright holders or facts about a transaction beyond the license. There is no better example of this floundering than a pair of cases argued on the same day in front of the same three-judge panel of the Court of Appeals for the Ninth Circuit, a court whose territory includes both Hollywood and Silicon Valley.

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They include the length of possession by the consumer, whether payment is one-time or ongoing; and how the transaction is characterized to the public. In short, we think a one-time payment made in exchange for permanent or open-ended possession of or access to a digital good—whether it’s a tangible copy or an intangible asset—results in ownership. That’s especially true when the transaction is characterized using words like “sale,” “buy,” or “own.” So when you click “Buy Now” and pay $9.99 for a digital movie, you own it, even if no permanent copy is ever stored on your device. And when you exchange cash for a coffee maker, you own both the hardware and the software embedded in it.

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Value Investing: From Graham to Buffett and Beyond
by Bruce C. N. Greenwald , Judd Kahn , Paul D. Sonkin and Michael van Biema
Published 26 Jan 2004

Many of them are tangible (or quasi-tangible, like money in the bank account as confirmed by the bank), and these can be valued directly with great precision. Starting at the top of the balance sheet has another advantage. As we work down the asset list from cash at the top, whose value is unambiguous, to various intangible assets like goodwill, whose value is often highly problematic, we are made naturally aware of the decreasing reliability of the stated values. Graham himself preferred to rely totally on current assets that could be realized within a year and whose accounting values did not vary far from the actual cash that could be obtained by selling them.

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The second valuation based on assets is to compare the price of the company's shares to the book value per share. The book value is the balance sheet entry for shareholder equity divided by the number of shares. Since equity by definition equals all the assets minus all the liabilities, book value can include the value of intangible assets such as goodwill and a number of other assets that may be worth considerably less than the balance sheet suggests. Buying stocks at a substantial discount to book value has been, as we have said, a successful investment strategy. No adjustment is made to the figures on the financial statement, which makes the strategy appropriate for investors who don't want to do a lot of work.

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Some analysts have suggested treating R&D as a capital investment and depreciating it on a straight-line basis over five years. If we simplify and say that this past year's outlays should be fully valued as an asset, last year's at 80 percent, and so on, we can calculate the value of an off-balance sheet intangible asset that estimates what a competitor would need to spend just to get into the business. For Intel in 1975, that amount would have been $27 million. This would have increased the reproduction costs of the assets by 40 percent, and the book value of equity from $74 to $101 million, a gain of 37 percent.

Free Money for All: A Basic Income Guarantee Solution for the Twenty-First Century
by Mark Walker
Published 29 Nov 2015

It is valued in the tens of billions but, like many twenty-first-century companies, most of its value does not lie in the ownership of Marx’s archetypical means of production: billowing factories, large tracts of land, railways, shipping lines, and the like. Accountants make a distinction between tangible and intangible assets. Examples of tangible assets besides Marx’s archetypical means of production are things like office chairs, computers, vehicles, equipment, and so on. Intangible assets are sometimes referred to as “nonphysical” assets. In saying that they are “nonphysical,” typically accountants do not mean to take a stand on the deep metaphysical issue about the ultimate substance or substances of the universe— they are dull accountants, after all.

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In saying that they are “nonphysical,” typically accountants do not mean to take a stand on the deep metaphysical issue about the ultimate substance or substances of the universe— they are dull accountants, after all. Very roughly, by “tangible assets,” accountants mean something that you could put a barcode on for inventory purposes, which is not generally possible with intangible assets. It is easy to imagine putting a barcode on land or vehicles owned by eBay, it is much more difficult to think about how to put a barcode on its proprietary software or the goodwill that eBay enjoys. Most of eBay’s value lies in its nonphysical assets, in particular, its goodwill. eBay is, by far, the largest online auction site. It seems that no one knows for sure how many online markets there are, in part because the basic software to coordinate buying and selling is fairly easy to set up.

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After all, US citizens already own something several orders of magnitude greater than eBay. US citizens have a large number of tangible assets under their control. We previously mentioned roads, but the list is far more extensive, for example, parks, bridges, tunnels, nuclear submarines, airports, universities, federally owned lands, and so on.6 The intangible assets of the United States include certain institutional arrangements for buyers and sellers, such as an advanced legal and judiciary system that makes the country an attractive place to do business. Just like eBay, the United States offers a market of trust. Indeed, the market of the United States is several orders of magnitude larger than that offered by eBay, so there is every reason to suppose that the intangible market of trust that United States offers to buyers and sellers is worth several orders of magnitude more than that offered by eBay.

file:///C:/Documents%20and%...
by vpavan

To comply with generally accepted accounting principles, or GAAP, many of these assets must be either depreciated (tangible assets such as buildings, furniture, and equipment) or amortized (intangible assets such as patents, trademarks, and copyrights). Depreciating an asset means allocating its cost as an expense over the period the company uses the asset to generate revenue. On the balance sheet, depreciable assets are shown at their original price, offset by depreciation that has accumulated over the years. Because depreciation is also an expense, it has the effect of reducing earnings in the income statement each year, which I'll explain below. Amortization similarly recognizes that an intangible asset has a limited useful life, and therefore a portion of the asset's cost is recorded as an expense each year.

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Amortization similarly recognizes that an intangible asset has a limited useful life, and therefore a portion of the asset's cost is recorded as an expense each year. On the balance sheet, intangibles are recorded at their historical cost less amortization. GAAP used to require companies to amortize all intangible assets over a maximum of forty years. In 2001, the Financial Accounting Standards Board, which determines GAAP, eliminated any maximum life over which intangible assets must be amortized and instead required companies to write down the assets when they lose value. Listed after the assets on the balance sheet are the company's liabilities and the stockholders' equity. Total assets must equal the total liabilities and stockholders' equity.

Mastering Book-Keeping: A Complete Guide to the Principles and Practice of Business Accounting
by Peter Marshall
Published 1 Feb 1997

Public companies listed on UK or other European stock exchanges already use the international terms such as: UK term Proﬁt and loss account Debenture Turnover Stock Debtors Creditors Proﬁt and loss account b/d Provision for doubtful debts Long-term liabilities International term Income statement Loan note Revenue Inventory Accounts receivable Accounts payable Retained proﬁts Allowance for doubtful debts Non-current liabilities 147 ARMSTRONG ENGINEERING BALANCE SHEET as at 31 Mar 200X INTANGIBLE ASSETS Goodwill 5,000 FIXED ASSETS Freehold premises Plant and machinery Less depreciation 35,000 Motor van Less depreciation Total ﬁxed assets CURRENT ASSETS Stock Debtors Less provision for doubtful debts Cash at bank Cash in hand 15,000 750 14,250 8,000 1,600 6,400 55,650 60,650 9,000 10,000 2,000 8,000 10,000 50 27,050 Less CURRENT LIABILITIES Creditors Working capital TOTAL ASSETS 12,000 15,050 75,700 Financed by CAPITAL Opening balance Add proﬁt for period 63,050 19,100 82,150 6,450 75,700 Less drawings TOTAL LIABILITIES Fig. 98.

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Assuming that the creditors had agreed to his transferring to the limited company the responsibility for the debts he had, as a sole proprietor, personally owed to them (by no means always the case), the opening balance sheet of the new company would be as shown below. ARMSTRONG ENGINEERING LTD BALANCE SHEET as at 31 Mar 200X INTANGIBLE ASSETS Goodwill 5,000 FIXED ASSETS Freehold premises Plant and machinery Motor van Total ﬁxed assets 35,000 14,250 6,400 CURRENT ASSETS Stock Debtors Cash at bank Cash in hand 55,650 60,650 9,000 8,000 10,000 50 27,050 Less CURRENT LIABILITIES Creditors Working capital 12,000 15,050 75,700 Financed by Authorised share capital 100,000 Ordinary shares @ £1.00 each 100,000 Issued Share Capital 75,700 Ordinary shares @ £1.00 each 75,700 Fig. 99.

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(2) Deﬁne the term Shareholders’ Funds (what does it comprise on a Ltd Company Balance Sheet)? Share capital and reserves (3) Debentures are a less risky investment than ordinary shares as they carry a ﬁxed rate of interest. (4) Goodwill shown on a Ltd Company Balance Sheet would be shown as an intangible asset. (5) When comparing a Ltd Company’s current assets with its current liabilities it is a measure of liquidity. (6) In a partnership details of interest on capital, salaries, interest on drawings and shares of proﬁt would be stated in the: partnership agreement / deed of partnership. (7) Why would a Revaluation Reserve appear on the Balance Sheet of a Ltd Company?

pages: 300 words: 77,787

Investing Demystified: How to Invest Without Speculation and Sleepless Nights
by Lars Kroijer
Published 5 Sep 2013

Other assets Individual investors often tend to think too narrowly about incorporating all their assets when thinking about their personal portfolio. Your personal assets include everything, including intangible assets, and even potential liabilities. Here are a few ideas, some of which may seem far-fetched: Tangible assets: Investment portfolio Future pension (who guarantees it?) Security and generosity of government safety net Insurance policies Property holdings (do you own a house?) Private investments Company shares or options Future inheritance (morbid perhaps, but do you have a sense of timing and how it is invested?) Car and other possessions Intangible assets: Education and qualifications Languages you speak Current job and prospects (if you work in finance you already have a lot of direct and indirect exposure to the financial markets, and may want to temper adding to it through your investment portfolio) Previous job experience (will affect future earnings potential) Partner’s education and job Geographic flexibility Liabilities: Flexibility of liabilities – will you certainly incur them?

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Index accountants active managers compared with index trackers, 2nd performance over time active personal portfolio management adding up the costs of advisory charges age life stages of financial planning and risk profile AIG allocations see investment allocations alternative investments alternative weightings ‘angel’ investing, 2nd annuities IRR (internal rate of return), 2nd apocalypse investing avoiding fraud and financial disasters and gold as security assets asset classes to avoid concentration risk customisation and noninvestment growth of, and overpayment of fees and institutional investors intangible and liabilities and portfolio theory in the rational portfolio, assets split tangible see also minimal risk assets avoiding fraud banks bailouts cash deposits with and financial disaster and gold as security and property investment Barclays US High Yield index Bernstein, William The Intelligent Asset Allocator bid/offer spread black swan events, 2nd, 3rd Bogle, John bonds bond indices, 2nd dollar domination of ETFs, 2nd and financial planning income from coupon payments indices and the rational portfolio adding other bonds to risk preferences, 2nd rebalancing your portfolio ‘risky’ bonds and liquidity shortterm, 2nd see also corporate bonds; government bonds; minimal risk assets Brazil government bonds broad-based portfolios and liquidity world equities, 2nd, 3rd, 4th, 5th Buffett, Warren, 2nd fee structure capital gains tax (CGT), 2nd, 3rd and gifts car insurance Case-Shiller House Price index, 2nd cash deposits deposit insurance government guarantees risk of CGT see capital gains tax (CGT) civil unrest collectibles commercial property market commodities, 2nd returns form company shares comparison sites, 2nd enhanced independent Contagion (film) corporate bonds adding to minimal risk assets, 2nd, 3rd and financial planning and credit quality ETFs, 2nd and financial planning liquidity of and minimal risk assets and portfolio theory, 2nd and the rational portfolio, 2nd, 3rd adjusting allocations, 2nd risk preferences real return expectations world corporate debt yields, 2nd costs see fees and expenses CRB Commodity index CRB Total Return index, 2nd credit ratings government bonds, 2nd, 3rd, 4th adding to minimal risk assets currency and government bonds, 2nd, 3rd, 4th matching and world equities currency-hedged investment products custody charges customisation Cyprus defined benefits pension schemes defined contribution pension schemes diversification and assets benefits of and corporate bonds, 2nd and equity market risk geographical and government bonds, 2nd and the rational portfolio, 2nd and world equities, 2nd Dow Jones index Industrial Average recovery from losses drop dead allocation early savers edge over the markets see investment edge efficiency frontiers EIS (Enterprise Investment Schemes) Elton, Edwin Modern Portfolio Theory and Investment Analysis emerging market companies listed on Western exchanges Enterprise Investment Schemes (EIS) equities and government and corporate bonds performance and portfolio theory and property investment and the rational portfolio allocations risk preferences, 2nd rebalancing your portfolio risk of diversification and false sense of security recovering from large losses standard deviation, 2nd, 3rd view that markets will always bounce back see also world equities equity risk premium and financial planning ETFs (exchange traded funds), 2nd, 3rd, 4th advantages to owning buying bonds, 2nd, 3rd commodity trading customisation fees and expenses in global property and gold trading implementing and index funds leveraged maturities and minimal risk bonds, 2nd physical or synthetic rebalancing your portfolio and taxes total expense ratio (TER) tracking errors European Union bonds, 2nd expenses see fees and expenses fat tails fees and expenses, 2nd adding up costs alternative investments benefits of paying lower fees and comparison websites financial advisers index trackers compared with active managers and investment edge pension plans and performance impact over time mutual funds, 2nd and the rational investor and the rational portfolio, 2nd rebalancing your portfolio Ferri, Richard All About Asset Allocation financial advisers, 2nd and comparison websites financial crisis 2008–09 and commodities trading and currency matching and government bonds yields and high risk preferences and liquidity and longterm financial planning, 2nd and market risk, 2nd, 3rd, 4th financial planning building your savings and the financial crisis 2008–09, 2nd and investment allocations, 2nd, 3rd and life stages and risk, 2nd risk surveys rules of thumb to consider supercautious savers financial software packages France government bonds fraud, avoiding frequent trading FTSE All-Share index FTSE All-Share Tracker fund FTSE NAREIT Global index, 2nd, 3rd fund pickers future performance mutual funds GDP and corporate bonds and world equity market value, 2nd Germany government bonds gifts and capital gains tax gold, 2nd as security Goldman Sachs government bonds adding to minimal risk assets, 2nd and financial planning and bank deposits banks and government defaults buying in base currency, 2nd credit ratings, 2nd, 3rd, 4th and diversification earnings ETFs, 2nd and the financial crisis (2008) and financial planning inflationprotected liquidity of longerterm maturity minimal risk and world equities, 2nd, 3rd and portfolio theory, 2nd, 3rd and the rational portfolio, 2nd, 3rd adjusting, 2nd, 3rd allocations, 2nd risk preferences real return expectations time horizons yields Greece government debt and bond yields hedge funds, 2nd, 3rd, 4th Japanese government bonds and liquidity high risk preferences home markets overinvestment in Icelandic banks income tax index funds, 2nd and ETFs and government bonds implementing maturities and minimal risk bonds, 2nd total expense ratio (TER) tracking errors index-tracking products, 2nd and active managers adding bonds to a portfolio compared with active managers, 2nd comparison sites, 2nd enhanced independent costs of fund changes and taxes future product development implementing license fees for and liquidity and mutual funds and the rational portfolio, 2nd, 3rd different risk preferences total expense ratio (TER), 2nd versus mutual fund returns over time world equities, 2nd see also ETFs (exchange traded funds); index funds India government bonds inflation earnings from minimal risk bonds inflation-adjusted government bonds inflation-protected bonds returns on world equities information/research costs institutional investors insurance buying deposit insurance schemes intangible assets interest rates cash deposits in banks government bonds, 2nd international investment investment allocations adding other government and corporate bonds and financial planning, 2nd, 3rd flexibility of financial goals life stages rebalancing your portfolio, 2nd investment edge, 2nd absence of, 2nd adding up the costs asset classes to avoid and commodities trading, 2nd and the competition different ways of having and expenses and performance picking your moment and private investments and the rational portfolio reconsidering your edge and world equities ‘invisible hand’ of the market IOUs (promissory notes) IRR (internal rate of return) annuities, 2nd iShares, 2nd Ishikawa, Tets How I Caused the Credit Crunch Japan commodities trading government bonds Nikkei index jewellery leverage ETFs and mortgages portfolios liabilities and the rational portfolio life insurance, 2nd life stages and financial planning liquidity equity portfolio and ‘risky’ bonds and ETFs minimal risk and private investments and the rational portfolio, 2nd, 3rd returns on illiquid investments selling your investment, 2nd localised risks avoiding and noninvestment assets Madoff, Bernie market capitalisation and world equities, 2nd market efficiency and inefficiency Mexico government bonds Microsoft investors, 2nd, 3rd and liquidity, 2nd mid-life savers minimal risk assets, 2nd adding other bonds to corporate bonds, 2nd, 3rd government bonds, 2nd adjusting the risk profile asset classes to avoid buying and diversification and equity markets ETFs and financial planning 50/50 split with world equities, 2nd, 3rd allocations government bonds earnings inflation-protected time horizons of inflationprotected bonds and liquidity as optimal portfolio and portfolio theory, 2nd in the rational portfolio, 2nd, 3rd, 4th, 5th, 6th real return expectations and world equities, 2nd Morgan Stanley mortgages and currency matching and leverage MSCI World Index, 2nd, 3rd, 4th mutual funds fees and performance, 2nd and index trackers national economies and equity market risk OEICs (openended investment companies) oil trading, 2nd optimal portfolio theory minimal risk asset past performance and future performance Paulson, John pension funds, 2nd, 3rd benefits and charges defined benefits schemes underfunded performance and fees index trackers versus active managers versus mutual funds portfolio theory and government bonds optimal and the rational investor price impact private equity capital, 2nd private investments, 2nd and liquidity privatisations and world equities professional investment managers property market investments, 2nd avoiding and financial disasters institutional investors and liquidity and the rational portfolio US subprime housing markets, 2nd, 3rd rational investing, 2nd core of ongoing tasks of rational portfolio adding other bonds to adjusting allocations and equity risk return expectations asset classes to avoid assets and liabilities assets split checklist corporate bonds, 2nd diversification financial benefits of and financial disasters geographical diversification government bonds, 2nd, 3rd, 4th, 5th implementation incorporating other assets and investment edge key components of a and liquidity, 2nd, 3rd and pension plans and portfolio theory and risk preferences risk/return profile, 2nd, 3rd, 4th tailoring to specific needs and circumstances tax adjustments tax benefits of holding and tax efficiency, 2nd, 3rd, 4th world equities, 2nd, 3rd, 4th see also minimal risk assets rebalancing your portfolio ticket size REITs (Real Estate Investment Trusts) residential property market retirees investment allocation retirement annuities and financial planning risk cash deposits credit risk and corporate bonds of equity markets equity risk premium high risk preferences and longterm financial planning, 2nd and the optimised market and the rational portfolio, 2nd, 3rd asset split risk preferences risk expertise websites risk surveys risk/return profile equity markets and financial planning, 2nd, 3rd and long-term financial planning minimal risk assets adding government and corporate bonds to pension plans and portfolio theory and the rational portfolio, 2nd, 3rd, 4th, 5th rebalancing your portfolio world equities riskless investment choice, 2nd S&P 500 index and the CRB Commodity index Index Tracker Portfolio standard deviation stocks volatility savings ‘doing nothing’ with and long-term financial planning life stages SD see standard deviation (SD) selling investments and liquidity software packages Spain government bonds standard deviation (SD) building your savings and equity market risk, 2nd, 3rd synthetic ETFs Taleb, Nassim Nicholas The Black Swan, 2nd tangency points tangible assets tax efficient proxies tax wrappers, 2nd taxes, 2nd advisers or accountants questions to ask benefits of the rational portfolio capital gains tax (CGT), 2nd, 3rd, 4th creating trading lots and financial disaster and pension plans, 2nd rational portfolio adjustment realising losses against tax advice websites tax efficiency and the rational portfolio, 2nd, 3rd, 4th tax schemes tax-sheltered or optimised products transaction tax, 2nd technology-focused funds, 2nd TER (total expense ratio), 2nd This Time is Different: Eight Centuries of Financial Folly (Reinhart and Rogoff) total expense ratio (TER), 2nd transaction taxes, 2nd, 3rd transfer charges turnover costs unit trusts, 2nd United Kingdom bank deposits and credit guarantee equities government bonds credit rating earnings from sterling investors United States corporate bonds, 2nd Dow Jones index, 2nd equity market, 2nd risk, 2nd, 3rd and total expense ratio government bonds credit ratings dollar investors earnings from versus property investment sub-prime housing market, 2nd, 3rd Vanguard, 2nd, 3rd, 4th, 5th, 6th FTSE AllShare index venture capital, 2nd Virgin FTSE All-Share Tracker fund volatility and financial planning predicting future Waal, Edmund de The Hare with Amber Eyes world equities adjusting the rational portfolio alternative weightings defining diversification benefits, 2nd, 3rd ETFs expected returns and financial planning 50/50 split with minimal risk assets, 2nd, 3rd investment allocation and high risk preferences indices liquidity of market value and minimal risk assets, 2nd overweighing ‘home’ equities and portfolio theory and the rational portfolio, 2nd, 3rd, 4th allocations risk preferences real return expectations US market, 2nd ‘Investing Demystified delivers, with great clarity and lucidity, the best possible advice you can get when it comes to personal investments and financial planning.’

pages: 137 words: 36,231

Information: A Very Short Introduction
by Luciano Floridi
Published 25 Feb 2010

During this span of time, Information and Communication Technologies (ICTs) evolved from being mainly recording systems - writing and manuscript production - to being also communication systems, especially after Gutenberg and the invention of printing - to being also processing and producing systems, especially after Turing and the diffusion of computers. Thanks to this evolution, nowadays the most advanced societies highly depend on information-based, intangible assets, information-intensive services (especially business and property services, communications, finance and insurance, and entertainment), and information-oriented public sectors (especially education, public administration, and health care). For example, all members of the G7 group - namely Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States of America - qualify as information societies because, in each country, at least 70% of the Gross Domestic Product (GDP) depends on intangible goods, which are information-related, not on material goods, which are the physical output of agricultural or manufacturing processes.

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Information has always had great value, and whoever has owned it has usually been keen on protecting it. This is why, for example, there are legal systems regulating intellectual property. Intellectual property rights concern artistic and commercial creations of the mind, and hence the relevant kinds of information and intangible assets. Copyrights, patents, industrial design rights, trade secrets, and trademarks are meant to provide an economic incentive to their beneficiaries to develop and share their information through a sort of temporary monopoly. Similarly, in many countries it is illegal to trade the securities of a corporation (e.g. bonds) on the basis of some privileged access to that corporation's non-public information, typically obtained while working for it (this is why it is referred to as insider trading).

pages: 289 words: 113,211

A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation
by Richard Bookstaber
Published 5 Apr 2007

But the relationship between the cost of assets and the value of the enterprise does not work as well for companies with intangible assets, and these increasingly form the basis of 137 ccc_demon_125-142_ch07.qxd 2/13/07 A DEMON 1:46 PM OF Page 138 OUR OWN DESIGN economic value today. Intangible assets—ideas, patents, proprietary software, brand names, trade secrets, trademarks, and copyrights—have values that cannot be extracted from their costs. The reach of intangibles is extensive; as Charles Leadbeater has said, “modern corn is 80 percent science and 20 percent corn,” alluding to the extensive lab development behind hybrid corn seed. By some estimates, intangible assets now make up 80 percent of the value of the S&P 500.

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By some estimates, intangible assets now make up 80 percent of the value of the S&P 500. They are what provide companies with their franchise value, sometimes bordering on monopolistic market position. Intangible assets are the product of imaginative people who walk out the door every night; others are formulas locked in a vault. And in many cases, once they have been created and the intellectual property has been claimed, they cannot be reproduced at any price. One simple indication that the current accounting conventions do not reflect the actual value of the enterprise is the disconnect that has appeared between market and book value. In the industrial era of the railroads, market value was all but defined by book value.

pages: 935 words: 197,338

The Power Law: Venture Capital and the Making of the New Future
by Sebastian Mallaby
Published 1 Feb 2022

Now much corporate investment is intangible: capital goes into R&D, design, market research, business processes, and software.[38] The new intangible investments fall squarely in the sweet spot of VCs: in explaining venture capital back in 1962, Rock said he was financing “intellectual book value.” In contrast, intangible assets pose challenges to other sorts of financiers. Banks and bond investors try to protect themselves from losses by securing “collateral”—claims on a borrower’s assets that can be seized and sold if the borrower defaults. But intangible assets exhibit sunkenness: once the investment is made, there is no physical object that can be hawked to recoup capital.[39] Likewise, traditional equity investors evaluate companies partly by tallying their physical assets, which are clearly reported in financial statements. But intangible assets are harder to measure. They elude standard accounting rules and their value is opaque: to evaluate a software development project, for example, you have to be close to the technology.

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They elude standard accounting rules and their value is opaque: to evaluate a software development project, for example, you have to be close to the technology. Hands-on venture capitalists are better equipped to allocate capital in this bewildering world: a world in which tangibles are displaced by intangibles. Because venture capital is particularly well suited to financing intangible assets, it is no surprise that it has spread geographically. Silicon Valley is still the center of the industry: Within the United States, the Valley is home to two-thirds of U.S. venture partners, and California’s share of U.S. venture fundraising jumped from 44 percent to 62 percent between 2004 and 2019.[40] At the same time, however, California-based investors are increasingly willing to back companies in other states, and the explosion of flows into VC funds has left plenty of money to find its way to partnerships outside the Valley.

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The global embrace of venture capital confirms what has been argued here: the attractions of the industry far outweigh its alleged shortcomings. As individuals, VCs do exhibit skill. As a group, they finance the most dynamic companies, generate disproportionate wealth and R&D, and knit together the fertile networks that drive the knowledge economy. In the future, as intangible assets increasingly eclipse tangible ones, venture capitalists’ hands-on style will contribute even more to our prosperity. Of course, there are myriad social problems that the venture industry won’t fix, and some it may exacerbate—inequality, for example.[45] But the right response to inequality is not to doubt venture capital’s importance or throw sand in its gears.

pages: 169 words: 43,906

The Website Investor: The Guide to Buying an Online Website Business for Passive Income
by Jeff Hunt
Published 17 Nov 2014

Because many of the products are digital or service-oriented, there is limited cost invested in goods sold. “The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack in will.” —Vince Lombardi Businesses have traditionally had physical and intangible assets. Websites have a third category of assets: digital assets. They are tangible because you can actually see them. You can go to a website and download the eBook or look at the pictures and read the articles. However, they are not physical, and they do not have the same level of cost as physical assets.

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Other Valuation Considerations Assets sometimes come into play when valuing websites. By assets, I mean physical property that will hold much or all of its value over a long period of time. This includes typical business assets, like facilities, automobiles, tools, machines, computer equipment, and inventory. There may also be digital assets, like software, or intangible assets, like patents. However, if a piece of software purchased today with the website won’t be able to be sold a year from now, either with or apart from the website, it may not have any current appreciable value. Only ascribe value to assets if they can be sold quickly. Only ascribe value to assets if they can be sold quickly.

pages: 287 words: 82,576

The Complacent Class: The Self-Defeating Quest for the American Dream
by Tyler Cowen
Published 27 Feb 2017

The result is that some markets have a greater element of winner-take-all, as is suggested by the data on corporate valuations. If we look at the S&P 500 stock index in 1975, the category of “intangible assets” accounted for about 18 percent of the value of American capital. Most American capital was in physical assets, such as machines and factories, tangible items that can be purchased and replicated if need be. Today, over 80 percent of the value of the S&P 500 is due to intangible assets, including trademarks, patents, brand name reputation, consumer goodwill, and other factors. That’s a big leap upward, from below 20 percent to above 80 percent for the value of corporate intangibles.

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Hirst, Damien history, models of homeownership Hsieh, Chang-Tai Huang, Te-Sheng Huckleberry Finn (Twain) Hurricane Katrina I Love Lucy (sit-com) immigration African and European Union and labor force and mobility and segregation See also migration incarceration crisis inequality income and mobility and returns on capital information technology (IT) and the Complacency Class and instability and matching and policing and productivity and segregation and social protest infovores infrastructure innovation and crime and culture decline in historical trends and living standards and matching and mobility and monopoly and productivity R&D and segregation and technology instability and crime domestic and dynamic future global and government and higher education See also social protests and riot intangible assets International Monetary Fund internet dating investment drought Ip, Greg Iran Iraq ISIS iTunes Jasper, James M. Jim Crow era job creation job switching Johnson, Ron Kalia, Ajay Kalven, Harry, Jr. Katz, Lawrence Kent State shootings Kerouac, Jack Keynes, John Maynard King, Martin Luther, Jr.

pages: 317 words: 87,566

The Happiness Industry: How the Government and Big Business Sold Us Well-Being
by William Davies
Published 11 May 2015

In the mental and moral world indeed he may produce new ideas; but when he is said to produce material things, he really only produces utilities; or in other words, his efforts and sacrifices result in changing the form or arrangement of matter to adapt it better for the satisfaction of wants.18 During the 1980s, it became fashionable to declare that capitalism had suddenly become based upon ‘knowledge’, ‘intangible assets’ and ‘intellectual capital’, following the demise of many heavy industries in the West. In truth, the economy was reconceived as a phenomenon of the mind a whole century earlier. Capitalism became oriented around consumer desire, directed by that most alluring spokesman for our silent inner feelings, money.

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By the 1980s, an employee’s customer care, service ethic and enthusiasm were not simply mental resources, which existed to help churn out more products: they were the product. The importance of employee happiness and psychological engagement becomes all the greater once corporations are in the business of selling ideas, experiences and services. Businesses speak of ‘intangible assets’ and ‘human capital’ in the hope of capturing this amorphous workplace ethos, but in practice it is nothing which resembles either an asset or capital. Some other way of conceiving of work is required. Secondly, the concept of health started to undergo some profound changes. In 1948, the newly founded World Health Organization redefined health as ‘a state of complete physical, mental and social well-being’ – an almost utopian proposition that few of us ever attain for very long.

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F., 28, 30 The Hidden Persuaders (Packard), 73, 74 Hilton, Steve, 191 homo economicus, 61–2 Hoover, Herbert, 100 HOPE (Hawaii’s Opportunity Probation with Enforcement) programme, 235 Hospital Anxiety and Depression Scale, 175 Hsieh, Tony, 113 Hudson Yards real estate project (NYC), 233–4, 235, 237 human capital, 126, 151, 160 human existence, ideal form of, 112 human optimality/optimization, 5, 129, 274 human resource management, 189, 238, 276 human resources profession, 108, 133 Hume, David, 14 Hyde Park (Chicago), 148 idealism, 27, 181 Ignite U, 134 imipramine, 162 income inequality, 34, 144. See also economic inequality Increasing Access to Psychological Therapies programme, 111 indices, 176 individual choice, theory of, 59 Influence: The Psychology of Persuasion (Cialdini), 238 Infoglut (Andrejevic), 260 Ingeus, 110, 112 insurance fraud, 42, 44, 45, 46 intangible assets, 126 internet addiction, 204–5, 207 internships, 274 interventions, 17, 20, 35, 108, 111, 265 Introduction to the Principles of Morals and Legislation (Bentham), 22 introspection, 22, 48, 63, 64, 78, 86 iPhone 6, 26, 135 iproniazid, 162 J. Walter Thompson (JWT), 93, 94, 95, 97, 215–16, 217, 218, 220, 225, 242 James, William, 83, 84, 86 Jawbone UP, 240 Jennings, Richard, 49, 50, 51 Jevons, William Stanley and Chicago School of economics, 150–1 childhood, 47–8 on commodities, 58 as converting economics into form of psychological mathematics, 116 on decision-making, 59 as fascinated with machine-like qualities of the mind, 56 on happiness, 113 on how we experience pleasures and pains, 65, 66 as imagining mind through metaphors of geometry and mechanics, 62 introduction of to economics, 60 on the mind as mechanical balancing device, 264 on money as yielding happiness, 114 and natural sciences, 59 as obsessed with understanding fluctuations in pleasure, 84 as one developer of theory of utility maximization, 62 on pleasure and pain having own discernible quantities, 61 reading of economics, 50, 55 representation of capitalism, 57 on true comprehension of Value, 54 as turning market into mind-reading device, 57 vision of calculating hedonist, 56 weight-lifting experiments of, 49, 59 Jobs, Steve, 161 Johns Hopkins University, 92 Johnson & Johnson, 94 Jourard Self-Disclosure Scale, 165 Jung, Minah, 182 just noticeable difference, 30, 36, 37 justice, theory of, 62 JWT (J.

pages: 478 words: 126,416

Other People's Money: Masters of the Universe or Servants of the People?
by John Kay
Published 2 Sep 2015

But you will also want to include many assets that are valuable and even tradable, but which are not things you can easily touch and feel: a copyright, part of the radio spectrum, an entitlement to walk across someone’s land or to emit smoke or extract water. Some assets – such as software – are on the borderline between the tangible and the intangible. Many goods and services have dematerialised. Possession of knowledge is as important as the ownership of physical property. These intangible assets have far greater significance today than Marx imagined (with wideranging implications). But this extension of the concept of capital should not – at least for present purposes – be taken too far. Economists talk about ‘human capital’, derived from education and training, which although not tradable is manifestly valuable.

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Apple’s future customers do not, however, report any matching liability, and perhaps they should not, since they will buy the company’s products only if they are delighted to do so. The difference between the value of Apple as a company and the value of its physical assets might be quantified as an ‘intangible asset’, the value of the ‘Apple brand’. But this reasoning is essentially circular. The ‘Apple brand’ is no more, or less, than the company, its products and its operations. The ‘brand value’ is simply a number calculated to make the stock market value of the company and the book value of its assets the same.2 To attach value to Apple stock far in excess of Graham’s book value is to recognise that a modern economy rests on design and ideas rather than on physical activity.

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Indeed the scale of demand for government funding and higher loan-to-value mortgages requires such funding. Asset managers should occupy the same central role in the investment channel that banks enjoy in the deposit channel. The goals are similar. Good and stable returns for savers, economic and financial stability. Control of costs. Flows of information about physical and intangible assets and their management, which promote economic efficiency for the benefit of savers, consumers, employees and taxpayers. Managed intermediation by asset managers, which has no need of daily valuation and redemption, potentially offers greater flexibility and the opportunity for asset managers and their customers to escape the tyranny of public markets and the predation of the high-frequency trader.

pages: 436 words: 76

Culture and Prosperity: The Truth About Markets - Why Some Nations Are Rich but Most Remain Poor
by John Kay
Published 24 May 2004

It is possible to estimate returns on human capital-the value of additional earnings that people can expect from an investment in schooling or an MBA. 8 Successful businesses-businesses with competitive advantages from distinctive capabilities-are worth more than the value of their buildings, their plant, and their stocks. Accountants used to call this the goodwill of the business. For the shop, the pub, or the small manufacturer, that was an appropriate term. The intangible asset was the loyalty of satisfied customers. The modern economy has many different kinds of distinctive capabilities and so many different kinds of intangible assets: competitive advantages based on brands or reputations with groups of customers; strategic assets such as patents and copyrights or local monopolies; structures of relationships with suppliers or employees. "Our people are our greatest asset" is a cliche of company reports, and there is a lot in it.

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But there is desperation in the term social capital. Putnam fears he can attract the attention of his audience only by expressing himself in economic terms. There is much to be said for reserving the term capital for what can be bought and sold in the market for capital. Some, but not many, intangible assets meet this test; human capital does not, and social capital certainly not. Education and skills are an asset and so is the glue that holds society together, but they are not in this sense capital. {15} ........................... . General Equilibrium The Coordination Problem Revisited ••••••••••••••••••••••••••••••••••••• It is now time to go back to the problem posed in chapter 11.

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Insider trading is the use of information gained through a relationship with the firm-e.g., as director or adviser. It is now illegal in Britain, the United States, and many other countries. 8. See, for example, estimates of rates of return to higher education in Harkness and Machin (1999). 9. These "intangible assets" are the capitalized value of rents arising from competitive advantages. This is why "Tobin's q" -the ratio of the market value of a company to its tangible assets-can appropriately exceed one. 10. Putnam (2000). 11. "Americans of all ages, all conditions, all minds, constantly unite." Tocqueville (1835), 489.

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Green Swans: The Coming Boom in Regenerative Capitalism
by John Elkington
Published 6 Apr 2020

THE OLD STORY Intriguingly, the online Lexicon, at least when consulted, failed to offer an entry for the term. Instead, having defined an asset as “something belonging to an individual or a business that has value or the power to earn money,” it went on to distinguish between tangible assets, “that have physical form, such as plant and equipment,” and intangible assets, which “have no physical form but are considered valuable resources of the business, e.g. patents, trademarks, goodwill, brand names, licenses, franchises, etc.” It did, however, mention wasting assets, “such as property or a business, that is losing money over time,” and toxic assets, “the value of which has fallen significantly and may fall further, especially as the market for them has frozen.

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But the future of capitalism has more to do with money than with technology, regulation, or standards—even if all three are crucially important. And my concern about the limitations of CSR, shared value, and even current conceptions of the circular economy stems from the respective movements’ absolute, and sometimes insufficiently critical, reliance on current forms of capitalism. True, we can expect the accelerating shift to intangible assets and investments to accelerate the transition to lower resource input economic models, but this alone is very unlikely to save us.81 So, alongside initiatives designed to redirect investment and, even more fundamentally, to reinvent economics, we need to dedicate a growing effort to exploring how business leaders, entrepreneurs, investors, city mayors, policy makers, and politicians can co-evolve what we might call the “Tomorrow’s Capitalism Roadshow.”

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See also change process stages; Future-Fit change approach; technology allowing to flourish, 166 Anthropocenic route, taking, 230–234 antibiotics through lens of, 108 assets with characteristics of, 73 be a leader, not an algorithm, 223–230 Black Swans starting off as, 182 business models with characteristics of, 53 calories through lens of, 102 capitalism with characteristics of, 202–208 carbon economy through lens of, 111 defined, 9, 22, 167 democracy with characteristics of, 208–213 different thinking, need for, 23–27 early sharing of content about, 199–201 exponential leaders, 236–242 future, differing views of, 190–193 global grand challenges approach, 186–187 governance with characteristics of, 71 gradual, then sudden evolution of, 76 growth with characteristics of, 57–58 historical, 43 impact with characteristics of, 64 liability with characteristics of, 68 losing control, risk of, 193–197 materiality with characteristics of, 69–70 overview, 1–3, 22–23, 219–223 as parallel reality with Black Swans, 9–10 plastics through lens of, 97 profitability with characteristics of, 55 purpose with characteristics of, 50 push and pull in evolution of, 189–190 recent examples, 42 reinventing everything, 197–199 space junk through eyes of, 116 spotting, 254–256 sustainability with characteristics of, 213–218 systemic change overview, 201–202 three horizons, two scenarios, 2000-2100, 38–39 and triple bottom line concept, 12–13 U-bend, unclogging, 234–236 value with characteristics of, 61 Green Swans (film), 9–10, 248 Green Transition Scoreboard, 233 growth, 47, 55–58 The Guardian (newspaper), 96 H Haan, Nick, 200, 222 Hamid, Mohsin, 109, 110 Harvard Business Review (HBR), 32, 155–158 Haut, Sonja, 253 Hawken, Paul, 141, 142, 232 Hemingway, Ernest, 79 Hichens, Robert, 198–199 Hill-Landolt, Julian, 229–230 Hippocratic Oath, 108 Hoffman, Donald, 27 Hofstetter, Dominic, 220 Holocene epoch, 86 Honda, 135 horseshoe crabs, 231–232 How Adam Smith Can Change Your Life (Roberts), 80 The Human Planet (Lewis and Maslin), 29 Humanitarians, exponential leaders as, 238 humor, 120–121 Hunter, Sarah, 240 Hurd, Nick, 212–213 Hutton, Will, 196 Hwang Sang-ki, 126 Hyatt, John Wesley, 94 hydropower, 201 Hype Cycle, Gartner, 173–175 I Ibbitson, John, 222–223 Ignatius, Adi, 155–156 illusion of control, 44 impact, 47, 61–64, 256 impact investing, 63, 64 Impossible Foods, 233 incremental change, 34, 35f, 57, 233–234 India, 82 Indonesia, 220–221 industrial revolutions, 175–176 industry federations and associations, 132 inflated expectations, in Gartner Hype Cycle, 174 influencing activities, 145–146 information, role in economy, 190, 192 Innovation Trigger stage, Gartner Hype Cycle, 174 innovations, in three horizons framework, 38–39 Innovators, exponential leaders as, 238 Institute for Energy Economics and Financial Analysis, 242 Institute for Transformative Technologies (ITT), 184–185 insulin, 156–157 insurance industry, 136–137 intangible assets, 72 integrated business models, 52 Interface, 142 intergenerational transfer of wealth, 201 International Accounting Standards Board, 58 International Finance Corporation, 119 international OTA, need for, 183, 185 International Renewable Energy Agency (IRENA), 133 International Space Station (ISS), 111 internet, 173, 175, 192 Internet of Things (IoT), 177 investors/investing, 63, 64, 162, 205–208, 242–244 invisible hand, 18, 25, 85 Ipsos, 219 Israel, 171 Ive, Jony, 213–214 Iversen, Torben, 212 ivory, 93 J Jackson, Clive, 245–246 Jackson, Tim, 56 Jakarta, Indonesia, 220–221 Japan, 135 Johnson, Nicholas, 113 Johnson & Johnson, 13 Johnson County, Indiana, 126–127 joint and several liability, 66 Jørgensen, Lars Fruergaard, 158–159 journalists, 227 JPMorgan, 142–143 Just, Inc., 233 JWT, 140–141 K Kahneman, Daniel, 204 Kaiser Permanente, 255 Kelly, Kevin, 36 Kelly, Marjorie, 205 Kendall, Geoff, 159–164 Kerr, Andrew, 201 Kessler, Donald, 112 Kingston, Phil, 189 Klee, Louis, 109 Klimenko, Svetlana, 207–208 Kondratiev, Nikolai, 203 Kramer, Mark, 59 Kuhn, Thomas, 41, 121–122, 123, 191, 230 L Langer, Ellen, 44 Lawrence Berkeley National Lab, 184–185 Layton, David, 190–191 leaded gasoline, 172 leaders, 223–230, 236–242.

pages: 443 words: 98,113

The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay
by Guy Standing
Published 13 Jul 2016

However, the global corporate landscape is changing fast. So-called ‘idea-intensive’ firms – in pharmaceuticals, media, finance and information technology – now account for 31 per cent of the profits of Western corporations, up from 17 per cent in 1999. They are global rentiers, deriving income from possession of ‘intangible assets’ such as patents, brands and copyright under a strengthened intellectual property regime constructed since the 1990s (see Chapter 2).25 And the industrialised-country share in global profits is set to decline; multinationals from emerging market economies already account for a quarter of the Fortune Global 500 biggest companies in the world and McKinsey expects them to account for half by 2025.

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As WIPO noted, ‘Strong brands can create high barriers to market entry, as new competitors may not be able to bear the high advertising costs of inducing consumers to switch to their products.’31 According to WIPO, between 1987 and 2011 US investment in brands accounted for 22 per cent of all investment in intangible assets, exceeding research and development and design. Globally, companies invested $466 billion in brands in 2011 (excluding in-house investment in marketing), with US companies in the lead. The value of the top 100 global brands was $3.3 trillion in 2015.32 Brand value can be a high proportion of a firm’s market capitalisation – a third, on average, according to a study by Interbrand, but some put it much higher.33 Coca Cola’s brand may contribute one half of its market capitalisation.

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Baldwin, The Copyright Wars: Three Centuries of Trans-Atlantic Battle (Princeton: Princeton University Press, 2014.) 29 ‘Academics want you to read their work for free’, The Atlantic, 26 January 2016. 30 ‘Do not enclose the cultural commons’, Financial Times, 19 April 2009. 31 WIPO, World Intellectual Property Report: Brands – Reputation and Image in the Global Market Place (Geneva: World Intellectual Property Organization, 2013). 32 BrandZ Top 100 Most Valuable Global Brands 2015 (Millward Brown, 2015). 33 Ian McClure suggests that intangible assets have risen from 20 per cent to 80 per cent of US corporate value since 1975. I. McClure, From a Patent Market for Lemons to a Marketplace for Patents: Benchmarking Intellectual Property in its Evolution to Asset Class Status, mimeo, May 2015. 34 K. Tienhaara, ‘Resisting the “law of greed”’, greenagenda.org.au, September 2015. 35 ‘Free exchange: Game of zones’, The Economist, 21 March 2015, p. 65. 36 C.

pages: 408 words: 108,985

Rewriting the Rules of the European Economy: An Agenda for Growth and Shared Prosperity
by Joseph E. Stiglitz
Published 28 Jan 2020

More broadly, according to the European Commission,13 the EU effective tax rate for digital businesses, such as online retailing or social media, which derive much or all of their value from the intangible assets of information and data, is 8.5 percent, or less than half the effective tax rate for traditional businesses (which are between 20.9 percent and 23.2 percent). This lower rate occurs because digital businesses are based on intangible assets that benefit both from specific tax incentives and the ease of shifting the recorded source of profits to low-tax jurisdictions. With aggressive tax planning, corporations can winnow down their effective taxation to essentially zero.

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.§ Of course, firms that were constrained in their investment to retained earnings also had to cut back on investments, since, as we have noted, profits typically fell, sometimes dramatically, during the downturn. Moreover, as firms borrowed to survive, they were less able to access credit for investment. In short, the downturn constrained private investment in capital goods (equipment), as well as in intangible assets like intellectual property. At the same time, the downturn, exacerbated by austerity, hurt firm and bank balance sheets. The adverse effect on banks’ balance sheets was one of the reasons for the cutback in credit: banks were less able and willing to lend.¶ The worsening of firm balance sheets—the decrease in their net worth and in their cash positions—made many less willing to invest (even if they could get access to credit), and sometimes even less willing to produce.# The combination of weak private investment and sagging public investment meant, of course, that overall investment was depressed.

pages: 453 words: 117,893

What Would the Great Economists Do?: How Twelve Brilliant Minds Would Solve Today's Biggest Problems
by Linda Yueh
Published 4 Jun 2018

‘Manu-services’ mean that we also underestimate the evolution of companies like Rolls-Royce, who make more money servicing and maintaining their engines than selling the engines themselves and yet continue to be viewed as a manufacturer rather than a supplier of services. It’s not only the output of services that’s intangible; the investment is too. Economists are debating whether better measurement of intangible assets would increase GDP. When research and development (R&D) and other intangible investments were included, US GDP was increased by 3 per cent.10 The OECD estimates that intangible investment, including that in human capital, such as education, and software, is as important as investment in tangible machinery and equipment in the UK.11 Since 2014, investment in private R&D has been included in UK GDP.

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Walker, Vancouver: Fraser Institute ________, 1990, Institutions, Institutional Change and Economic Performance, Cambridge: Cambridge University Press North, Douglass C., Gardner Brown and Dean Lueck, 2015, ‘A Conversation with Douglass North’, Annual Review of Resource Economics, 7, pp. 1–10 OECD, 2012, ‘Income Inequality and Growth: The Role of Taxes and Transfers’, OECD Economics Department Policy Notes, No. 9 ________, 2013, ‘New Sources of Growth: Intangible Assets’, Paris: OECD; www.oecd.org/sti/inno/46349020.pdf ________, 2015, Economic Surveys: United Kingdom, Paris: OECD Ostry, Jonathan D., Andrew Berg and Charalambos G. Tsangarides, 2014, ‘Redistribution, Inequality, and Growth’, International Monetary Fund Staff Discussion Note SDN/14/02; www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf Parsons, Talcott, 1931, ‘Wants and Activities in Marshall’, Quarterly Journal of Economics, 46(1), pp. 101–40 Pessoa, João Paulo and John Van Reenen, 2013, ‘Decoupling of Wage Growth and Productivity Growth?

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Mitchell, 1988, Abstract of British Historical Statistics, Cambridge: Cambridge University Press, pp. 869–73. 10. Stephanie H. McCulla, Alyssa E. Holdren and Shelly Smith, 2013, ‘Improved Estimates of the National Income and Product Accounts: Results of the 2013 Comprehensive Revision’, US Bureau of Economic Analysis, Washington, DC 11. OECD, 2013, ‘New Sources of Growth: Intangible Assets’, Paris: OECD; www.oecd.org/sti/inno/46349020.pdf 12. Adam Smith, 1978 [1763], Lectures on Jurisprudence (alternative title for the Lectures on Justice, Police, Revenue and Arms), ed. Ronald E. Meek, David D. Raphael and Peter G. Stein, Oxford: Clarendon Press, p. 499. 13. Smith, Wealth of Nations, bk I, ch. 2, para. 12. 14.

pages: 374 words: 113,126

The Great Economists: How Their Ideas Can Help Us Today
by Linda Yueh
Published 15 Mar 2018

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Walker, Vancouver: Fraser Institute ———, 1990, Institutions, Institutional Change and Economic Performance, Cambridge: Cambridge University Press North, Douglass C., Gardner Brown and Dean Lueck, 2015, ‘A Conversation with Douglass North’, Annual Review of Resource Economics, 7, pp. 1–10 OECD, 2012, ‘Income Inequality and Growth: The Role of Taxes and Transfers’, OECD Economics Department Policy Notes, No. 9 ———, 2013, ‘New Sources of Growth: Intangible Assets’, Paris: OECD; www.oecd.org/sti/inno/46349020.pdf ———, 2015, Economic Surveys: United Kingdom, Paris: OECD Ostry, Jonathan D., Andrew Berg and Charalambos G. Tsangarides, 2014, ‘Redistribution, Inequality, and Growth’, International Monetary Fund Staff Discussion Note SDN/14/02; www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf Parsons, Talcott, 1931, ‘Wants and Activities in Marshall’, Quarterly Journal of Economics, 46(1), pp. 101–40 Pessoa, João Paulo and John Van Reenen, 2013, ‘Decoupling of Wage Growth and Productivity Growth?

pages: 400 words: 124,678

The Investment Checklist: The Art of In-Depth Research
by Michael Shearn
Published 8 Nov 2011

Common Sources of Competitive Advantages To help you identify the sources of competitive advantage, I’ve borrowed several concepts from financial-services company Morningstar, which uses these concepts as the foundation of its stock analysis. Dorsey distills the sources of competitive advantage into four categories (Dorsey combines brand loyalty, patents, and regulatory licenses into one category titled intangible assets) which I have broken down into six categories: 1. Network economics 2. Brand loyalty 3. Patents 4. Regulatory licenses 5. Switching costs 6. Cost advantages stemming from scale, location, or access to a unique asset Let’s take a closer look at each source. Source #1: Network Economics One of the strongest sources of competitive advantage is network economics.

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You need to adapt the calculation to the type of business you are analyzing. The pros and cons of each method are highlighted below. The Basic Equation Let’s first start with the basic equation for ROIC: Invested capital = total assets − excess cash +/− accumulated amortization and depreciation +/− goodwill or other intangible assets + off-balance sheet items − non-interest bearing current liabilities Calculate the Numerator First, isolate the earnings from the operations of the business by removing interest income, taxes, and interest expense: Remove interest income from cash balances because it is not generated by the core operations of the business.

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During 2010, Schultz said that his customer-satisfaction scores actually rose, reaching their highest levels ever because, “We reinvested in our people, we reinvested in innovation, and we reinvested in the values of the company.”56 Also, think about this: If the management team is continually announcing cost-cutting programs, this is a sign that they are not focused on continually cutting unnecessary costs. These types of businesses are often serial restructurers as well. For example, during his Hewlett-Packard tenure (2005 to 2010), CEO Mark Hurd took $3.2 billion in restructuring charges and $3.3 billion in write-downs for amortization of intangible assets related to acquisitions. This buy-and-restructure strategy helped HP deliver annual revenue growth of 7.5 percent and 22 percent growth in earnings per share during Hurd’s tenure. However, Hurd was constantly restructuring the workforce by increasing the use of contract manufacturing and other cost-cutting measures.

pages: 306 words: 78,893

After the New Economy: The Binge . . . And the Hangover That Won't Go Away
by Doug Henwood
Published 9 May 2005

One of the boldest is Baruch Lev, an NYU accounting professor who shed his fields reputation for caution, rudely violating Italo Svevo's dictum that there's no room for dreams in double entry. (No marginal figure, in August 2000 Lev won the aptly named Wildman Medal, given by the American Accounting Association, for making the year's greatest contribution to his profession.) Lev dreams in numbers—or, more precisely, he wants to put numbers on "intangible assets, ideas, brands, ways of working, and franchises," as an introduction to an interview with Lev in the New Economy bible Fast Company put it (Webber 2000). Lev argues that the 500-year-old discipline, invented by the 14th-century Venetian mathematician Luca PacioH, is simply inadequate to the ineffable glories of 21st-century capitalism.Today, knowledge, not things, rule.

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.^ That's what drove the stock-market rally, promoted the exuberant mood, and provided the cash to keep things going. New Economists would argue that conventional measures of profit- After the New Economy profit rate, 1952-2002 nonfinancial corporations 07o ''■'■■"''' 1952 1958 1964 1970 1976 1982 1988 1994 2000 ability shown here—^profits divided by the value of the capital stock—undervalues intangible assets like brand names, patents, and ways of working. But to include them as capital would lower the profit rate—and since the value of such intangibles has pu-tatively been rising, adding them to capital would reduce the great upsurge of the 1980s and 1990s. Conceptually, these intangibles seem instead like ways of increasing profit—though often at the expense of competitors.

pages: 263 words: 75,455

Quantitative Value: A Practitioner's Guide to Automating Intelligent Investment and Eliminating Behavioral Errors
by Wesley R. Gray and Tobias E. Carlisle
Published 29 Nov 2012

Asset quality is measured as the ratio of noncurrent assets other than plant, property and equipment to total assets. AQI measures the proportion of total assets where future benefits are more opaque and the assets are considered intangible. The measure may indicate attempts at cost deferrals in the form of intangible assets on the balance sheet. SGI = sales growth index. Ratio of sales in year t to sales in year t − 1. Sales growth does not indicate manipulation; however, high sales growth does create certain expectations for management—many of which are unsustainable. Managers who face decelerating fundamentals and who currently manage high-expected-growth firms have high incentive to manipulate earnings.

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The BM performance pattern offers no evidence for the hypothesis that balance-sheet-based value measures perform better than income or cash flow statement TABLE 7.5 Price Ratio Performance During Economic Expansions value metrics when the economy generates more returns from tangible assets (e.g., property, plant and equipment) relative to intangible assets (e.g., human capital, research and development, and brand equity). Overall, there is little evidence that a particular price ratio delivers better performance than all other metrics during expanding economic periods. Table 7.6 again shows no clear evidence that a particular price ratio consistently outperforms all other strategies in contracting economic periods.

pages: 305 words: 75,697

Cogs and Monsters: What Economics Is, and What It Should Be
by Diane Coyle
Published 11 Oct 2021

Starting with manufacturing, progressing to tradable services, multinationals outsourced low-value activities—often to low-income countries—and retained the high-value intangible activities within their corporate walls. At the same time, the corporate boundaries crossed national boundaries while intangible assets were easily shifted to low-tax territories. The driver has been the rapidly declining cost of transmitting information and performing computations. Richard Baldwin (2006) has traced the effects on the international structure of production, describing the ‘unbundling’ of different stages in the value chain into differently located links, and particularly the separation of ideas from manufacture.

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The costs of information and communication also reshape organisations’ internal structures. Better access to information makes it more efficient for important decisions to be delegated while cheaper communication may mean it is easier to refer up for decisions (Bloom et al. 2014). In practice, the decentralisation effect has dominated. Multinationals retain intangible assets at the centre of production networks or—as it is often described—as the dominant member of a production ecosystem. The transformation of production goes beyond conventional outsourcing, and the delayering of corporate hierarchies, however. The scope for reorganising production by combining inputs internal to the firm—capital assets, direct employees, intangibles—with external ones such as cloud computing (Coyle and Nguyen 2019) or a contingent workforce (Boeri et al. 2020) is immense.

pages: 272 words: 76,154

How Boards Work: And How They Can Work Better in a Chaotic World
by Dambisa Moyo
Published 3 May 2021

Specifically, State Street Global Advisors published a letter to board members entitled “Aligning Corporate Culture with Long-Term Strategy,” stating, “This year we will be focusing on corporate culture as one of the many, growing intangible value drivers that affect a company’s ability to execute its long-term strategy.” The global accounting firm EY recently found that “intangible assets” such as culture make up, on average, 52 percent of an organization’s market value (and in some sectors as much as 90 percent). Researchers have documented that, in the United States and UK, value is driven more by intangible, rather than tangible, assets—further underscoring the importance of corporate culture.

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This is unfolding alongside a number of other employment trends that corporate boards should be attuned to, including the development of the information gig economy, the trend of working beyond traditional retirement age, and changes in workplace behavior and dress. Securing top talent is becoming tougher in part because of greater competition for fewer high-quality candidates and rising barriers to immigration. But, perhaps more crucially, it is also becoming harder at precisely the moment when the knowledge economy is taking off. Investment in intangible assets—for example, R&D, strong brands, and intellectual property—has doubled as a share of trade in recent years, from 5.5 percent to 13.1 percent. A 2019 McKinsey report underscored this point, explaining that “value creation is shifting to upstream activities, such as R&D and design, and to downstream activities, such as distribution, marketing, and after-sales services.”

pages: 515 words: 126,820

Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World
by Don Tapscott and Alex Tapscott
Published 9 May 2016

“There will always be those who refuse to follow the protocol, who abscond and hide secret value in parallel off-grid networks, what we call the black market, off balance sheet, shadow banking.”69 How does one reconcile non-transaction-based accounting measures, particularly the recognition of intangible assets? How are we going to track intellectual property rights, brand value, or even celebrity status—think Tom Hanks? How many bad films must this Oscar winner make before the blockchain impairs the Hanks brand value? The argument for triple-entry accounting is not against traditional accounting.

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Sure, the networks have enabled companies to outsource to low-cost geographies. But the Internet dropped transaction costs inside the firm as well. From Hierarchy to Monopoly So companies today remain hierarchies, and most activities occur within corporate boundaries. Managers still view them as a better model for organizing talent and intangible assets such as brands, intellectual property, knowledge, and culture, as well as for motivating people. Corporate boards still compensate executives and CEOs far beyond any reasonable measure of the value they create. Not incidentally, the industrial complex continues to generate wealth, but not prosperity.

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Through smart contracts, an entrepreneur could automate many aspects of a company’s operations: purchase orders, payroll, interest on debt, and financial audits in real time. Two new models for individual entrepreneurship will gain traction: METERING EXCESS CAPACITY. From the centralized sharing economy to the distributed metering economy, individuals will be able to loan out their spare beds, wheelbarrows, oxen, and other tangible and intangible assets to peers in a network based on reputation scores. Blockchain enables previously impossible revenue streams such as metering Wi-Fi, electricity generated from roof-installed solar panels, Netflix subscriptions, latent computing power in your phone, and other household appliances—all through micropayments and smart contracts.

pages: 322 words: 84,580

The Economics of Belonging: A Radical Plan to Win Back the Left Behind and Achieve Prosperity for All
by Martin Sandbu
Published 15 Jun 2020

Profit-maximising banks will pour more lending into sectors or places that already have plenty of it (because that is where asset values are high), and stay away from those in the grip of a credit drought (where they are low).7 Finally, an overgrown financial sector allocates resources to the wrong things. Rather than funding the business activities that promise most productivity growth, it, too, often funds activities that offer physical security for loans—above all, real estate and construction.8 In contrast, the sectors of the future—especially knowledge-intensive ones with only intangible assets—get less funding than they need.9 This is a feature of credit, and above all bank credit, because such loans commonly require the borrower to offer security that the promised payment terms are upheld. Noncredit financing—such as equity or other forms of direct or indirect ownership—does not promise a predefined return that needs to be secured.

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In line with the policies I proposed for financial reform in chapter 9, such institutions may be chartered with a view to providing noncredit forms of financing. They could also be set up to favour the sort of activities that traditional lending is biased against (see chapter 9), and target, for example, knowledge-intensive start-ups with intangible assets that normal bank lending struggles to use as collateral.32 Another example is to use planning laws to lower business costs—for example, by improving the use of land—or increase population density. The UK think tank the Centre for Cities argues, based on successes in the Netherlands and Germany, that making a region thrive depends on increasing the density of its cities to deepen the available pool of knowledge workers available and “make it easier for people and organisations to share information and come up with new ideas.”33 Fourth, a necessary ingredient for a critical mass of knowledge workers is a critical mass of knowledge-intensive jobs.

pages: 307 words: 82,680

A Pelican Introduction: Basic Income
by Guy Standing
Published 3 May 2017

In that case, following the same logic, private inheritance should also be abolished. If private inheritance is allowed, then the principle of social inheritance should be too. The Rentier Economy Our inherited wealth does not only consist of land and physical assets, but intangible assets as well, including financial assets and ‘intellectual property’. Intangible assets also generate economic rents derived from natural or contrived scarcity, enabling companies and individuals to gain income simply by virtue of possession. In the case of intellectual property, the state creates and enforces regulations and laws that have generated vast rental incomes from patents, copyrights, brands and the like.

pages: 301 words: 89,076

The Globotics Upheaval: Globalisation, Robotics and the Future of Work
by Richard Baldwin
Published 10 Jan 2019

The book’s authors argue that this is nothing short of a “quiet revolution.” Today, companies invest more in intangible assets—things like design, branding, patents, R&D, and software—than in traditional, tangible assets—things like machinery, buildings, and computers. Thoughts, not things, if you will. The sea change started in the 1970s. Investment in tangible assets—let’s just call it capital—as a share of the economy peaked around 1979 and has fallen since. Investment in intangible assets—call it “knowledge”—has instead risen steadily. Knowledge overtook capital around 1990. Increasingly, value is created by labor working with knowledge—either knowledge clusters controlled by firms like Google and Apple, or knowledge stuck into people’s heads in the form of education and experience.

pages: 321

Finding Alphas: A Quantitative Approach to Building Trading Strategies
by Igor Tulchinsky
Published 30 Sep 2019

By comparing snapshots, investors can find changes that could cause a repricing of the company’s outstanding equity. Total assets are typically used as a normalizing factor to make the values of other factors comparable among different companies or to compare snapshots of the same company at different times. For US companies, the value of total assets includes the intangible asset known as goodwill, defined as what a company pays for another company above book value. Though goodwill contains items such as branding, investors should generally consider whether to discount the goodwill included in the total assets as a normalizing factor. The following well-known factors constructed from the balance sheet were positively correlated with future returns from 1976 to 1996, as observed by Piotroski (2000): •• Increased liquidity (current assets over current liabilities) •• Improved sales over total assets •• No equity issuance •• Less long-term debt Table 19.1 The balance sheet equation Balance sheet YYYYMMDD Assets Liabilities + Equity Current assets Current liabilities Other assets Long-term debt Intangible assets (goodwill, etc.)

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The following well-known factors constructed from the balance sheet were positively correlated with future returns from 1976 to 1996, as observed by Piotroski (2000): •• Increased liquidity (current assets over current liabilities) •• Improved sales over total assets •• No equity issuance •• Less long-term debt Table 19.1 The balance sheet equation Balance sheet YYYYMMDD Assets Liabilities + Equity Current assets Current liabilities Other assets Long-term debt Intangible assets (goodwill, etc.) Total assets Shareholders’ equity 144 Table 19.2 Finding Alphas The income statement Income statement YYYMMDD Net sales (sales) A Interest income B Cost of goods C Operating expenses D Income taxes E Gross margin A C Income from operations A C D Gross income A B Net income A B C D E THE INCOME STATEMENT The income statement reflects changes in the balance sheet from one time period to the next, as shown in Table 19.2.

pages: 348 words: 83,490

More Than You Know: Finding Financial Wisdom in Unconventional Places (Updated and Expanded)
by Michael J. Mauboussin
Published 1 Jan 2006

The analysis also points to the appropriate financial tools to assess various businesses. 24 You’ll Meet a Bad Fate If You Extrapolate The Folly of Using Average P/Es For past averages to be meaningful, the data being averaged have to be drawn from the same population. If this is not the case—if the data come from populations that are different—the data are said to be nonstationary. When data are nonstationary, projecting past averages typically produces nonsensical results. —Bradford Cornell, The Equity Risk Premium Intangible assets . . . surpass physical assets in most business enterprises, both in value and contribution to growth, yet they are routinely expensed in the financial reports and hence remain absent from corporate balance sheets. This asymmetric treatment of capitalizing (considering as assets) physical and financial investment while expensing intangibles leads to biased and deficient reporting of firms’ performance and value.

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The intangible group comprises Altria, Coca-Cola, Microsoft, and Procter and Gamble. Over the five reported fiscal years that ended with 2006, the tangible group had a cash-flow-to-net-income ratio of 28 percent, versus a 111 percent ratio for the intangible group. There is pervasive evidence that the global economy is moving from a reliance on tangible to intangible assets, including market-to-book ratios, workforce allocation, and the rising significance of education. Further, because intangible-reliant businesses have few assets on their balance sheets, they tend to show high returns on capital. With other factors held constant, higher cash-flow-to-net-income ratios and returns on capital support higher price-earnings ratios.4 The final factor that dictates the price-earnings ratio is the equity-risk premium, or the return that equity investors demand above and beyond a risk-free security.

pages: 287 words: 44,739

Guide to business modelling
by John Tennent , Graham Friend and Economist Group
Published 15 Dec 2005

But this ignores the fact that the benefit of most assets is more likely to be derived over time rather than moving with market values. The method used is to spread the cost of the asset over an estimated period of benefit or useful economic life. This spreading concept, or matching of cost against the years that derive benefit, is known as “depreciation” for tangible assets and “amortisation” for intangible assets. A common exception to this principle is land, which, unless the land value is being eroded by the business (such as is in mining), need not be depreciated. In most companies, the administration required for capitalising and depreciating assets means small assets are often written off on purchase.

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A decline in the ratio may indicate that the company is over-provided with assets and could free up capital with some disposals. Rapid growth in the ratio may indicate that capacity constraints have been reached and more time for maintenance and repairs should be considered. The ratio is normally confined to just tangible fixed assets – the ones used operationally. Intangible assets included in the ratio (or evaluated individually) can give rise to some strange results over the life of a model which do not help in interpreting performance. For example, goodwill may be amortised and hence the ratio is likely to rise year on year for this reason alone. Working capital turnover This measure indicates how well the cash cycle of stock/inventory, debtors/receivables and creditors/payables is managed. 202 16.

pages: 389 words: 87,758

No Ordinary Disruption: The Four Global Forces Breaking All the Trends
by Richard Dobbs and James Manyika
Published 12 May 2015

To illustrate the scale of the opportunity, consider this change: on July 31, 2013, the US Bureau of Economic Analysis released GDP figures that for the first time categorized research and development and software into a new category of “intellectual property products.” We estimate that digital capital is now the source of roughly one-third of total global GDP growth, with intangible assets (think of the value of Google’s search algorithm or Amazon’s recommendation engine) being the main driver.41 For businesses and governments alike, failing to navigate today’s technological tide will mean losing out on a huge economic opportunity as well as increasing vulnerability to potential disruptions.

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For GE, Africa is one of the most promising growth regions, having produced revenues of $5.2 billion in 2013. GE in 2014 partnered with the Millennium Challenge Corporation to provide $500 million in financing for the Ghana1000 project, a huge, 1-gigawatt power plant the company is helping to build in Western Ghana.47 Beyond tapping tangible assets, companies are able to mine intangible assets—knowledge, competencies, data—that can help them participate in global flows. Some do so for philanthropic purposes. Coca-Cola used its market distribution expertise in sub-Saharan Africa to manage the storage and delivery of AIDS drugs in countries such as Tanzania. “We’re not lending our trucks or our fleet, or our motorcycles,” as Coca-Cola CEO Muhtar Kent put it.

pages: 323 words: 90,868

The Wealth of Humans: Work, Power, and Status in the Twenty-First Century
by Ryan Avent
Published 20 Sep 2016

Mankiw, Gregory, ‘Yes, the Wealthy Can Be Deserving’, The New York Times, 6 February 2014. 25. Corn, David, ‘Romney Tells Millionaire Donors What He Really Thinks of Obama Voters’, www.motherjones.com, 17 September 2012. 26. On a PPP-adjusted, per capita basis; data from the IMF. 27. Ocean Tomo, ‘Annual Study of Intangible Asset Market Value’, LLC, 2015. 28. Weil, David, The Fissured Workplace: Why Work Became So Bad and What Can be Done to Improve It (Cambridge, MA: Harvard University Press, 2014). 29. US Census Bureau, New Residential Construction. 30. S & P Case-Shiller Home Prices Indexes. 31. ‘The model minority is losing patience’, The Economist, 3 October 2015; IMF data. 32.

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Acemoglu, Daron, and Robinson, James A., Why Nations Fail: The Origins of Power, Prosperity, and Poverty (London: Profile Books, 2012) 5. The Firm as an Information-Processing Organism 1. OECD, Entrepreneurship at a Glance 2015, August 2015. 2. Coase, R. H., ‘The Nature of the Firm’, Economica, Vol. 4, No. 16 (Nov. 1937). 3. Ocean Tomo, ‘Annual Study of Intangible Asset Market Value’, LLC, 2015. 4. Clayton M. Christensen (1952–), Kim B. Clark Professor of Business Administration at the Harvard Business School, and author of The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Cambridge, MA: Harvard Business Review Press, 1997). 5.

pages: 372 words: 94,153

More From Less: The Surprising Story of How We Learned to Prosper Using Fewer Resources – and What Happens Next
by Andrew McAfee
Published 30 Sep 2019

These changes, if and when they’re successfully put into practice, are called intangible assets,II and they’re what allow a company to put new technologies to work, obtain higher productivity, pay more, and gain competitive advantage over rivals in an industry. So a period of broad, deep, and fast tech progress such as we’re experiencing during this Second Machine Age should be expected to generate both superstars and zombies in industries around the world. In an era where few companies succeed at the difficult work of not only acquiring powerful new technologies but also the right intangible assets, the superstars pull ahead. Concentration thus increases.

pages: 339 words: 95,270

Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace
by Matthew C. Klein
Published 18 May 2020

These variations have been exploited by creative problem-solvers at accountancy firms and within large corporations. People who in previous eras might have written symphonies or designed cathedrals have instead saved companies hundreds of billions of dollars in taxes by shifting trillions of dollars of intangible assets across the world over the past two decades. One consequence is that many companies avoid paying any tax on their foreign sales. Another is that many countries’ trade figures are now unusable. When the U.S. income tax was introduced in 1913, it assessed nothing on money earned abroad. Nobody seemed to mind until the 1950s, when American companies started aggressively relocating parts of their businesses to foreign countries to exploit lower tax rates.

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Although the tax law passed at the end of 2017 lowered the effective corporate tax rate below 20 percent and more or less replaced America’s worldwide system of corporate taxation with a territorial system, it did not remove the incentives for profit shifting.28 These profit shifts have also done strange things to the official figures on trade and investment, especially as companies have transferred more and more of the value of what they produce into intangible assets. About 40 percent of all profits earned by multinational corporations outside their home markets are shifted from high-tax jurisdictions, such as China, France, Germany, Japan, and the United States, into low-tax jurisdictions, such as the Cayman Islands, Ireland, and Singapore. Exports from the high-tax countries are artificially depressed, imports are artificially elevated, and profits earned from subsidiaries in corporate tax havens are unreasonably large.29 Consider Apple.

pages: 756 words: 167,393

The Tylenol Mafia
by Scott Bartz
Published 21 Sep 2011

Section 936 allowed corporations to shelter from federal tax a substantial amount of U.S. income obtained from products with intangible assets, such as drug patents, manufactured in Puerto Rico. In 1982, Congress made changes to Section 936 to “lessen the abuse caused by companies’ claiming tax-free income generated by intangibles developed outside of Puerto Rico.” The Tax Equity and Fiscal Responsibility Act of 1982 established that, in general, income from intangible assets, such as patents, trademarks, and trade names, transferred by a parent company to its Section 936 subsidiary would be taxable to U.S. shareholders.

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The Tax Equity and Fiscal Responsibility Act of 1982 established that, in general, income from intangible assets, such as patents, trademarks, and trade names, transferred by a parent company to its Section 936 subsidiary would be taxable to U.S. shareholders. But the Act still gave corporations the right to claim income attributable to certain intangible assets as nontaxable. Thus, even after 1982, Section 936 corporations were able to shelter from federal tax a substantial portion of the income earned on certain products manufactured in Puerto Rico. Carl Vergari’s only interest in J&J’s Puerto Rican operation was in discovering where the Tylenol manufactured there was actually packaged. What Vergari had already come to understand, or was very close to understanding, was that the Tylenol from Lot AHA090, in the second bottle of cyanide-laced Tylenol, had been shipped from Puerto Rico in bulk containers and had then undergone the packaging process at a repackaging facility in the continental United States.

pages: 505 words: 161,581

The Founders: The Story of Paypal and the Entrepreneurs Who Shaped Silicon Valley
by Jimmy Soni
Published 22 Feb 2022

“PayPal going public is what allowed me to have the capital to start SpaceX, because I could sell stock or borrow against the stock,” Musk said. “Before that, I didn’t really have meaningful cash.” I. “Goodwill” in accounting refers to the attempt to quantify intangible assets—brand value, training, loyal employees, and the like. They matter especially in the context of a financial transaction—like the merger of Confinity and X.com—when those intangible assets must be priced for accounting purposes. In 2001, companies were required to “amortize” those costs over a period, which reduced profitability. 22 AND ALL I GOT WAS A T-SHIRT In the IPO aftermath, PayPal’s employees undertook a new ritual: checking PYPL’s stock price.

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“What do you want”… “driving him”: Author interview with Chris Payne, September 13, 2019. “Imagine you could”… “Yahoo goes by”: Author interview with Ed Ho, August 8, 2019. “the coolest URL” Author interview with Elon Musk, January 19, 2019. They sold X.com: The details of the transaction are included in PayPal’s S-1 filing, under a section regarding Goodwill and Other Intangible Assets. “In May 1999, the Company acquired the X.com domain name in exchange for 1,500,000 shares of the Company’s Series A mandatorily redeemable convertible preferred stock at an aggregate value of $0.5 million,” https://www.sec.gov/Archives/edgar/data/1103415/000091205. “Under the looming”: Email from Dave Weinstein to author on August 9, 2019, containing “The Early History of X.com” as a Word document.

pages: 626 words: 167,836

The Technology Trap: Capital, Labor, and Power in the Age of Automation
by Carl Benedikt Frey
Published 17 Jun 2019

Quoted in ibid. 68. See, for example, T. F. Bresnahan, E. Brynjolfsson, and L. M. Hitt, 2002, “Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence,” Quarterly Journal of Economics 117 (1): 339–76; E. Brynjolfsson, L. M. Hitt, and S. Yang, 2002, “Intangible Assets: Computers and Organizational Capital,” Brookings Papers on Economic Activity 2002 (1): 137–81; E. Brynjolfsson and L. M. Hitt, 2000, “Beyond Computation: Information Technology, Organizational Transformation and Business Performance,” Journal of Economic Perspectives 14 (4): 23–48. 69. M. Hammer, 1990, “Reengineering Work: Don’t Automate, Obliterate,” Harvard Business Review 68 (4): 104–12. 70.

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The question of whether the recent productivity slowdown is an artifact of mismeasurement is thus not a question of whether mismeasurement exists but one of whether it has gotten larger in recent years. Economists have shown that the answer is no. While there is surely mismeasurement, it seems to have gotten smaller, not larger. Mismeasurement associated with prices of computer hardware and related services as well as intangible assets (such as patents, trademarks, and advertising expenditures) only make the productivity slowdown worse. The decline in domestic production of computer-related goods and services since the period 1995–2004 means that despite mismeasurement’s having worsened for some digital technologies, the mismeasurement problem was greater then than it is now.

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Pancras, London at Seven Years of Age, to Endure the Horrors of a Cotton-Mill. London: J. Doherty. Brynjolfsson, E., and L. M. Hitt. 2000. “Beyond Computation: Information Technology, Organizational Transformation and Business Performance.” Journal of Economic Perspectives 14 (4): 23–48. Brynjolfsson, E., L. M. Hitt, and S. Yang. 2002. “Intangible Assets: Computers and Organizational Capital.” Brookings Papers on Economic Activity 2002 (1): 137–81. Brynjolfsson, E., and A. McAfee. 2014. The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. New York: W. W. Norton. Brynjolfsson, E., and A. McAfee. 2017. Machine, Platform, Crowd: Harnessing Our Digital Future.

pages: 436 words: 98,538

The Upside of Inequality
by Edward Conard
Published 1 Sep 2016

According to the study’s estimates, intangible investments rose from about 7 percent of non-farm-business output in the late 1970s to 10 percent in the early 1990s to about 14 percent today. Intangible investments rose dramatically in the 1990s when productivity accelerated (see Figure 1-4, “U.S. Investment in Intangibles as a Percentage of GDP”). Visit bit.ly/2bpMCid for a larger version of this image. Given America’s heavy investment in knowledge-intensive intangible assets, it hardly seems coincidental that total factor productivity—productivity growth from innovation and know-how rather than from greater capital investment or education per worker—surged from a growth rate of 0.5 percent per year from 1974 to 1995 to 1.75 percent a year from 1995 to the economic peak preceding the financial crisis.

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Nor does innovation create assets that risk-averse savers have typically demanded as collateral, namely assets that are easy to value and sell in the event of a default, such as real estate, inventory, credit card and other accounts receivables, and auto loans. Lenders have been far more reluctant to fund risky venture capital investments or expertise-driven companies with intangible assets—the types of companies that drive growth today—like consulting, accounting, and law firms that are difficult to value and sell. So far we have not seen diversified portfolios of risky hard-to-value venture investments funded with debt. Instead, we have seen an explosion of subprime mortgages in the United States, the construction of empty cities in China, and the funding of never-to-be-paid-back “government-guaranteed” Greek consumption by German-financed debt.

How to Form Your Own California Corporation
by Anthony Mancuso
Published 2 Jan 1977

In return for the issuance of (number of shares) 3 shares of stock of the corporation, transferor(s) hereby sell(s), assign(s), and transfer(s) to the corporation all right, title, and interest in the following property: All the tangible assets listed on the inventory attached to this bill of sale and all stock in trade, goodwill, leasehold interests, trade names, and other intangible assets [except (any nontransferred (address assets shown here) 4] of (name of prior business) 5, located at 6. of prior business) In return for the transfer of the above property to it, the corpo ration hereby agrees to assume, pay, and discharge all debts, duties and obligations that appear on the date of this agreement on the books and owed on account of said business [except (any unassumed liabilities shown here) 7].

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In return for the issuance of __________________________________ shares of stock of the corporation, transferor(s) hereby sell(s), assign(s), and transfer(s) to the corporation all right, title, and interest in the following property: All the tangible assets listed on the inventory attached to this Bill of Sale and all stock in trade, goodwill, leasehold interests, trade names, and other intangible assets except _____________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ of ________________________________________________________ , located at ______________________________________________________________________ .

pages: 391 words: 97,018

Better, Stronger, Faster: The Myth of American Decline . . . And the Rise of a New Economy
by Daniel Gross
Published 7 May 2012

As Peter Elkind wrote in Fortune in May 2001, “Among the stocks she has never downgraded are Priceline, Amazon, Yahoo, and FreeMarkets—all of which have declined between 85% and 97% from their peak.” Meeker concluded that America’s liabilities vastly outweighed its assets. But she ignored some of America’s tangible assets, such as the nation’s holdings of gold and its huge stock market capitalization. And she ignored many of the nation’s intangible assets, like the ability to conjure up giant global Internet companies from nothing. In the summer of 2011 I was at a dinner with Tung Chee Hwa, the billionaire shipping magnate and former chief executive of Hong Kong, and a handful of journalists. When one of my colleagues mentioned Meeker’s analysis, he was somewhat incredulous.

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Financial Investments, 38–39 unions, 78, 136, 166, 174, 206 efficiency economy and, 62–63 Uniqlo, 92–93, 144 United Kingdom, 4–5, 19, 29, 46, 110–11, 202 bank bailouts in, 38–39 exports and, 103, 121–22, 125, 129 FDI and, 84, 86, 95 in history, 13–14, 25, 46 timely policy decisions and, 32, 38–39 United States: exceptionalism of, 21 in future, 24 in history, 12–16, 18, 25, 61, 81–82, 97, 99, 141, 200, 205–6, 218 tangible and intangible assets of, 22, 25 and unpopularity of Americans, 3 United States of Europe, The (Reid), 19 UPS, 76–77, 182 US Block Windows, 169 U.S. Chamber of Commerce, 146–47 Vale Columbia Center on Sustainable International Investment, 94 Vestas, 85–86 Vietnam, 15, 26, 128, 140, 168–69, 177, 230 Virginia, 13, 88–91, 103 Volvo, 88 von Claparede, Clemens, 91–92 Wallquest, 110–14, 116, 119 Wall Street Journal, 3, 5, 41, 84, 87, 96, 161, 185, 203, 212, 227 China and, 165, 167 exports and, 100–101, 103, 106–8, 125 Walmart, 141, 218, 227 efficiency economy and, 62, 68, 75–76 supersizing and, 202, 207 W&H Properties, 70 Wang, David and Mei Xu, 176–77 Wang Feng, 165 Wanzek, Terry, 158 Washington Mutual, 39, 46 Washington Post, 6, 172 Waste Management, 65–66 Wedding of the Waters (Bernstein), 206 Weill, Sandy, 85 Weiner, Stephanie, 188 Welch, Jack, 146 Wells Fargo, 37–38 Wessel, David, 100 Whirlpool, 173 White, Martha C., 108 Whitney, Richard, 13 Will, George, 5 Williams, Brad, 96 Williams, Deron, 126 Willis, Bruce, 129–30 Willoughby, Jack, 47 wind turbines, 26, 85–86, 178 Wolf, Martin, 28–29 Woodside, Chuck, 104–5 World Economic Forum, 3–4, 26, 86, 172, 197–98, 203 World War I, 14, 24–25, 137 World War II, 2, 7, 17–18, 24–25, 61 Worth, 170–71 Wylie, Andrew, 127 Yagerman, Justin, 76–77 Yanai, Tadashi, 93 Yergin, Daniel, 106 Yessbuts, 217 Yoplait, 89 Yum Brands, 138–39 Zakaria, Fareed, 19 Zandi, Mark, 31, 207 Zions Bank, 38 Zipcar, 192–93, 195 Zuckerberg, Mark and Randi, 197 Zynga, 18, 84, 201 About the Author Daniel Gross, economics editor and columnist at Yahoo!

Risk Management in Trading
by Davis Edwards
Published 10 Jul 2014

An illiquid market does not allow easy trading. Typically, an illiquid market requires the trader to spend a substantial amount of time finding a trading partner or to take an unfavorable price. REAL ASSETS Real assets include both tangible and intangible assets. Tangible assets are physical assets like physical commodities, buildings, equipment, and land. Intangible assets don’t have physical form but still have value. Some examples of intangible real assets are inventions, works of art, and advertising trademarks. Some of the most commonly traded real assets are petroleum products, metals, and agricultural commodities.

pages: 305 words: 101,093

Who Owns This Sentence?: A History of Copyrights and Wrongs
by David Bellos and Alexandre Montagu
Published 23 Jan 2024

In no sector is this more obvious than in the way we now treat the products of the mind. Copyright initially promised control of a small range of created works to the creators themselves. However, in the transition from an agrarian economy to the industrial and then the information age, the value of intangible assets has come to eclipse the value of land, plant and machinery, and all other kinds of material wealth. As a result, the handful of corporations that now control most intellectual property of substance strut the world stage as the new barons of the twenty-first century. Today, six of the largest corporations in the world – Apple, Microsoft, Alphabet, Amazon, Meta and Disney, each having a larger capital valuation than the gross domestic product of many of the world’s nations – are almost entirely constituted by their ownership and control of copyright material, partly in the form of content such as films and songs (Disney, Amazon), partly in design registrations and patents (Apple and Microsoft) and mostly in the form of computer software (Alphabet, Meta).

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In practical terms, “privileges … restrict activity [in the book trade], concentrate it in a small number of hands, place a significant tax on it and weaken domestic production against competition from abroad”. History has proved Condorcet right on most of these counts, most especially on the insight that property rights in intangible assets inevitably concentrate wealth and power in a few hands. A more sweeping denunciation of such ideas came from Jean-Jacques Rousseau, in his Discourse on the Origin and Basis of Inequality among Men, with its unforgettable opening attack on Lockean property itself: The first man, who, after enclosing a piece of ground, took it into his head to say, “This is mine,” and found people simple enough to believe him, was the true founder of civil society.

pages: 139 words: 33,246

Money Moments: Simple Steps to Financial Well-Being
by Jason Butler
Published 22 Nov 2017

‘You might think: I want to go this way, now I want to go this way, and what about this way?’ A person born in the developed world today has a 50% chance of living to 105 and this age has been increasing steady at the rate of two years every decade.42 Increasing longevity means you need to be adaptable, flexible and invest in both intangible assets (health, well-being, skills, education, relationships) and tangible financial assets (savings, investments and property). Financial planning is a process, not a one-time event or static written document and it is the thinking behind the process that is important, particularly in the context of a very long life.

pages: 1,845 words: 567,850

J.K. Lasser's Your Income Tax 2014
by J. K. Lasser
Published 5 Oct 2013

A sale of property that allows for tax deferment if at least one payment is received after the end of the tax year in which the sale occurs. The installment method does not apply to year-end sales of publicly traded securities. Dealers may not use the installment method. Investors with very large installment balances could face a special tax; see 5.21. Intangible assets. Intangible assets that come within Section 197, such as goodwill, are amortizable over a 15-year period; see 42.17. Inter vivos or lifetime trust. A trust created during the lifetime of the person who created the trust. If irrevocable, income on the trust principal is generally shifted to the trust beneficiaries; see 39.6.

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If the useful life of an item is less than a year, its cost, including sales tax on the purchase, is deductible. Otherwise, you generally may recover your cost only through depreciation except to the extent first-year expensing applies (42.3). IRS regulations provide safe harbors, including a “12-month” rule, for expenditures relating to intangible assets or benefits (40.3). - - - - - - - - - - Caution Penalties and Fines Penalties or fines paid to a government agency because of a violation of any law are not deductible. You may deduct penalties imposed by a business contract for late performance or nonperformance. - - - - - - - - - - EXAMPLE A new roof is installed on your office building.

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In the case of art objects and antiques used as business assets, the useful life requirement remains relevant because such assets are not subject to exhaustion, wear or tear, or obsolescence. The IRS may continue to dispute and litigate cases in which depreciation is claimed on assets with indeterminable useful lives. For example, in a private ruling, the IRS did not allow a developer to depreciate street improvements that had been turned over to a city. The improvements were an intangible asset that improved the developer’s access to its real estate projects, but this asset had an unlimited life. There was no determinable useful life because the city had agreed to maintain and replace the improvements as necessary, and there was no evidence that the city would ever assess the developer for replacement costs.

Schaum's Outline of Bookkeeping and Accounting, Fourth Edition (Schaum's Outlines)
by Joel Lerner and Rajul Gokarn
Published 13 Sep 2009

These assets, sometimes called ﬁxed assets or plant assets, are used in the operation of the business rather than being held for sale, as are inventory items. Other Assets. Various assets other than current assets, ﬁxed assets, or as sets to which speciﬁc captions are given. For instance, the caption “In vestments” would be used if signiﬁcant sums were invested. Often com panies show a caption for intangible assets such as patents or goodwill. In other cases, there may be a separate caption for deferred charges. If, 22 BOOKKEEPING AND ACCOUNTING however, the amounts are not large in relation to total assets, the various items may be grouped under one caption, “Other Assets.” Current Liabilities. Debts that must be satisﬁed from current assets with in the next operating period, usually one year.

pages: 368 words: 32,950

How the City Really Works: The Definitive Guide to Money and Investing in London's Square Mile
by Alexander Davidson
Published 1 Apr 2008

Sometimes, the integration of two companies can be problematic and not all deals enhance shareholder value, at least in the short term. Disclosure and regulation When acquisitions take place, it is hard to assess their value creation due to signiﬁcant goodwill expenditure, coupled with under-reporting of intangible assets and a general lack of disclosure, according to Intangible Business, a brand valuation consultancy. The FTSE 100 reported about £40 billion spent on acquisitions in 2006, and over half of this expenditure was put down to goodwill, according to a survey by Intangible Business. One conclusion was that the International Financial Reporting Standards (IFRS) 3, the accounting standard for business combinations, had failed in its objective of showing investors how their money was being spent on acquisitions.

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Under IFRS, the cost of stock options estimated at the date of grant has been included as an expense on the income statement for the ﬁrst time. Many companies have restructured their remuneration schemes to avoid calculating the expense, which requires option valuation models. Goodwill must be recognised and tested annually for impairment, and there must be signiﬁcant disclosure of key assumptions and sensitivities. Valuing of intangible assets such as brands has proved more complex than anticipated, according to accountants. Dividends are no longer accrued, unless they are declared before the year end. Deferred taxes are calculated on revaluations as well as on timing differences and feedback suggests that this broad area of accounting has been challenging, as predicted.

pages: 398 words: 105,917

Bean Counters: The Triumph of the Accountants and How They Broke Capitalism
by Richard Brooks
Published 23 Apr 2018

This was because Celanese would have to pay more for Celluloid than its assets – such as its debts, stocks, plant and technology rights like patents – were worth in isolation. There was nothing unusual about that in an acquisition. But the extra cost, which double-entry bookkeeping dictated would be treated as acquiring an intangible asset known as ‘goodwill’, would have to be written off over the following years. Predicted future profits would be reduced. Black reasoned that this would not give a fair picture of the combined enterprise. So he formulated a new method of accounting for such a merger, which he called ‘pooling-of-interest’ accounting.

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By the mid 1990s, retailers like Gap and Nike, as well as major food and drinks companies, began selling to customers around the world from the Netherlands and other tax-efficient locations. Pharmaceutical companies such as Pfizer and GlaxoSmithKline made sure that rights to blockbuster drugs were held in fiscally friendly locations: Singapore, Switzerland, Puerto Rico. A new form of competition opened up among countries bidding to host the valuable financial capital and intangible assets that companies could now locate anywhere in the world. In return for small local contributions, these territories would enable the world’s largest companies to avoid far larger amounts of tax in the countries where they really did business. The bean counters would show them how to do it. Ireland had been offering tax breaks in an attempt to attract industry into its troubled economy, mainly from the UK, since the 1950s.

Not for Bread Alone: A Business Ethos, a Management Ethic
by 松下幸之助
Published 14 Jun 1984

To me, the union and the management are the two wheels of a wagon that hold up the company. If one wheel expands more than the other, the wagon will tilt. Only when both wheels are balanced can we move forward smoothly, together. 148 14. Pricetag on the Intangible IT is much more diffIcult to assign a value to a hidden, intangible asset than it is to a clearly defmed, visible object, but it can be just as important. In business, managerial ability cannot be seen, but clearly it is worth a great deal more when it is strong than when it is weak, when it fosters growth in the company and higher standards of employee welfare. Superior management ultimately works to benefIt society as a whole, which gives it a very high value indeed.

pages: 147 words: 37,622

Personal Kanban: Mapping Work, Navigating Life
by Jim Benson and Tonianne Demaria Barry
Published 2 Feb 2011

She juggles two jobs, each located on opposite ends of her city. She’s studying for her financial advisor certification. She’s training for a triathlon. She wants to write a book. She’s thinking about opening her own business, perhaps getting another degree. The list goes on. As a mathematician and an expert in intangible assets, Jessica understands she has so much on her plate that busting her WIP limit is almost guaranteed, and money is just one asset to focus on out of many. One Sunday over brunch, we mapped out her Personal Kanban. We discussed what she enjoyed, what she valued, what her aspirations were. Within minutes of what would become a three hour conversation, it became apparent that Jessica was not simply goal-oriented, she was a goal-collector.

pages: 316 words: 117,228

The Code of Capital: How the Law Creates Wealth and Inequality
by Katharina Pistor
Published 27 May 2019

If these costs can be socialized by delegating the protection of legal rights to a state, asset holders save huge costs. More important, they can use their assets in ways that simply would not be available otherwise. They can own assets without exercising physical control over them. They can even own intangibles, assets that cannot be touched and exist only in legal code, and move assets into legal shells where they are protected from their own creditors, pledge and even re-pledge them without leaving more than a paper trail. They can do all of this only with the help of law that is backed by state power. Private and public power are often juxtaposed and depicted as engaged in ongoing bargaining with each other for favors.

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Economic Growth,” The Review of Income and Wealth 55, no. 3 (2009):661–686, p. 661. 31. The saying is attributed in slight variations to different authors, including Peter Ducker (a business economist), Peason (a mathematical statistician), or Thomas Monson. 32. Corrado et al., “Intangible Capital,” p. 683. Leonard I. Nakamura, “Intangible Assets and National Income Accounting,” Review of Income and Wealth 56, no. S1 (2010):S135–S155. For a summary of this literature, see also Saskia Clausen and Stefan Hirth, “Measuring the Value of Intangibles,” Journal of Corporate Finance 40 (2016):110–127. 33. Haskel and Westlake, Capitalism without Capital, figures 2.1 and 2.2, pp. 24–25. 34.

J.K. Lasser's Your Income Tax 2016: For Preparing Your 2015 Tax Return
by J. K. Lasser Institute
Published 19 Oct 2015

…

If the useful life of an item is less than a year, its cost, including sales tax on the purchase, is deductible. Otherwise, you generally may recover your cost only through depreciation except to the extent first-year expensing applies (42.3). IRS regulations provide safe harbors, including a “12-month” rule, for expenditures relating to intangible assets or benefits (40.3). Caution Penalties and Fines Penalties or fines paid to a government agency because of a violation of any law are not deductible. You may deduct penalties imposed by a business contract for late performance or nonperformance. EXAMPLE A new roof is installed on your office building.

…

pages: 670 words: 194,502

The Intelligent Investor (Collins Business Essentials)
by Benjamin Graham and Jason Zweig
Published 1 Jan 1949

Several forces can widen a company’s moat: a strong brand identity (think of Harley Davidson, whose buyers tattoo the company’s logo onto their bodies); a monopoly or near-monopoly on the market; economies of scale, or the ability to supply huge amounts of goods or services cheaply (consider Gillette, which churns out razor blades by the billion); a unique intangible asset (think of Coca-Cola, whose secret formula for flavored syrup has no real physical value but maintains a priceless hold on consumers); a resistance to substitution (most businesses have no alternative to electricity, so utility companies are unlikely to be supplanted any time soon).5 The company is a marathoner, not a sprinter.

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According to Morgan Stanley, a generous total of 185 companies passed Graham’s test. Moderate price-to-book ratio. Graham recommends a “ratio of price to assets” (or price-to-book-value ratio) of no more than 1.5. In recent years, an increasing proportion of the value of companies has come from intangible assets like franchises, brand names, and patents and trademarks. Since these factors (along with goodwill from acquisitions) are excluded from the standard definition of book value, most companies today are priced at higher price-to-book multiples than in Graham’s day. According to Morgan Stanley, 123 of the companies in the S & P 500 (or one in four) are priced below 1.5 times book value.

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A generation or more ago it was the standard rule, recognized both in average stock prices and in formal or legal valuations, that intangibles were to be appraised on a more conservative basis than tangibles. A good industrial company might be required to earn between 6 per cent and 8 per cent on its tangible assets, represented typically by bonds and preferred stock; but its excess earnings, or the intangible assets they gave rise to, would be valued on, say, a 15 per cent basis. (You will find approximately these ratios in the initial offering of Woolworth preferred and common stock in 1911, and in numerous others.) But what has happened since the 1920s? Essentially the exact reverse of these relationships may now be seen.

pages: 120 words: 39,637

The Little Book That Still Beats the Market
by Joel Greenblatt
Published 2 Jan 2010

In addition to working capital requirements, a company must also fund the purchase of fixed assets necessary to conduct its business, such as real estate, plant, and equipment. The depreciated net cost of these fixed assets was then added to the net working capital requirements already calculated to arrive at an estimate for tangible capital employed. NOTE: Intangible assets, specifically goodwill, were excluded from the tangible capital employed calculations. Goodwill usually arises as a result of an acquisition of another company. The cost of an acquisition in excess of the tangible assets acquired is usually assigned to a goodwill account. In order to conduct its future business, the acquiring company usually only has to replace tangible assets, such as plant and equipment.

pages: 2,045 words: 566,714

J.K. Lasser's Your Income Tax
by J K Lasser Institute
Published 30 Oct 2012

…

pages: 482 words: 125,973

Competition Demystified
by Bruce C. Greenwald
Published 31 Aug 2016

The problem lay on virtually every line of Cisco’s income statement, but the main culprits were research and development. TABLE 7.4 Cisco’s increased costs as a percentage of sales, 1996–2000 Cost of sales Total Change 1996–2000 Cost of goods sold 1.2% Research and development 4.5% Sales and marketing 3.1% General and administrative –0.6% Amortization of goodwill and purchased intangible assets 1.5% In-process research and development 7.3% Total 17.0% CHANGING CLASS Cisco did not one day decide that it should spend more on research and development because it had all these talented engineers and wanted to keep them busy. Beneath the decline in margins lay a major change in the nature of Cisco’s business.

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For example, when a record company buys an independent label with its stable of recording artists, or when a major drug company buys a start-up firm with a promising product, or when a cable company buys a local cable system with its customer contracts, a reproduction value has been put on these intangible assets. Calculating the reproduction value of the assets of a firm in a viable business, just like establishing the liquidation value, does not require projections into the future. The necessary information is all currently available. Also, in working down the balance sheet, the estimates of value move from the most certain (cash and marketable securities) to the least certain (the intangibles).

pages: 460 words: 131,579

Masters of Management: How the Business Gurus and Their Ideas Have Changed the World—for Better and for Worse
by Adrian Wooldridge
Published 29 Nov 2011

The recession may have complicated the picture somewhat, but the war for talent continues to rage. The global economy is becoming ever more brain-intensive. Baruch Lev, of New York University, argues that “intangible assets”—ranging from a skilled workforce to patents to know-how—account for more than half of the market capitalization of America’s public companies.6 Accenture, a management consultancy, calculates that intangible assets have shot up from 20 percent of the value of companies in the S&P 500 in 1980 to about 70 percent today. McKinsey has divided American jobs into three categories: “transformational” (extracting raw materials or converting them into finished goods), “transactional” (interactions that can easily be scripted or automated), and “tacit” (complex interactions requiring a high level of judgment).

pages: 204 words: 53,261

The Tyranny of Metrics
by Jerry Z. Muller
Published 23 Jan 2018

Or the money-managers who buy shares of well-performing stocks and sell shares of underperforming stocks in time for listing in quarterly reports, disguising the fact that they bought the high-performing stocks at high prices and that their poorly-performing stocks may have turned around had they held onto them—known in the trade as “window dressing.”24 A focus on measurable performance indicators can lead managers to neglect tasks for which no clear measures of performance are available, as the organizational scholars Nelson Repenning and Rebecca Henderson have recently noted.25 Unable to count intangible assets such as reputation, employee satisfaction, motivation, loyalty, trust, and cooperation, those enamored of performance metrics squeeze assets in the short term at the expense of long-term consequences. For all these reasons, reliance upon measurable metrics is conducive to short-termism, a besetting malady of contemporary American corporations.

pages: 554 words: 158,687

Profiting Without Producing: How Finance Exploits Us All
by Costas Lapavitsas
Published 14 Aug 2013

For a global perspective on the interaction between part-time employment and women’s entry into the labour force, see Guy Standing, ‘Global Feminization Through Flexible Labor’, World Development 17:7, 1989; and Guy Standing, ‘Global Feminization Through Flexible Labor: A Theme Revisited’, World Development 27:3, 1999. 7 There is sizeable mainstream literature arguing that new technology has altered the nature of work by adding intangible organizational assets to the production process; see Erik Brynjolfsson and Lorin Hitt, ‘Beyond Computation’, Journal of Economic Perspectives 14:4, 2000; Brynjolfsson and Hitt, ‘Computing Productivity’, MIT-Sloan Working Paper 4210–01, 2003; Brynjolfsson, Hitt, and Shinkyu Yang, ‘Intangible Assets’, Brookings Papers on Economic Activity: Macroeconomics, vol. 1, 2002; Timothy Bresnahan, Brynjolfsson, and Hitt, ‘Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence’, Quarterly Journal of Economics 117:1, 2002; Marshall Van Alstyne and Brynjolfsson, ‘Global Village or Cyber-Balkans’, Management Science, 2004.

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Brynjolfsson, Erik, and Lorin Hitt, ‘Beyond Computation: Information Technology, Organizational Transformation and Business Performance’, Journal of Economic Perspectives 14:4, 2000, pp. 23–48. Brynjolfsson, Erik, and Lorin Hitt, ‘Computing Productivity: Firm-Level Evidence’, MIT-Sloan Working Paper 4210–01, 2003. Brynjolfsson, Erik, Lorin Hitt, and Shinkyu Yang, ‘Intangible Assets: Computers and Organizational Capital’, Brookings Papers on Economic Activity: Macroeconomics, vol. 1, 2002, pp. 137–99. Buiter, Willem, and Anne Sibert, ‘The Central Bank as the Market-Maker of Last Resort: From Lender of Last Resort to Market-Maker of Last Resort’, in The First Global Financial Crisis of the 21st Century, ed.

pages: 660 words: 141,595

Data Science for Business: What You Need to Know About Data Mining and Data-Analytic Thinking
by Foster Provost and Tom Fawcett
Published 30 Jun 2013

The effectiveness of a predictive modeling solution may depend critically on the problem engineering, the attributes created, the combining of different models, and so on. It often is not clear to a competitor how performance is achieved in practice. Even if our algorithms are published in detail, many implementation details may be critical to get a solution that works in the lab to work in production. Furthermore, success may be based on intangible assets such as a company culture that is particularly suitable to the deployment of data science solutions. For example, a culture that embraces business experimentation and the (rigorous) supporting of claims with data will naturally be an easier place for data science solutions to succeed. Alternatively, if developers are encouraged to understand data science, they are less likely to screw up an otherwise top-quality solution.

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cases creating, Deployment ranking vs. classifying, Visualizing Model Performance–Example: Performance Analytics for Churn Modeling casual modeling, From Business Problems to Data Mining Tasks causal analysis, Assessing the Influence of the Incentive causal explanation, Data-Driven Causal Explanation and a Viral Marketing Example causal radius, The Task causation, correlation vs., The news story clusters cellular churn example unbalanced classes in, Problems with Unbalanced Classes unequal costs and benefits in, Problems with Unequal Costs and Benefits Census Bureau Economic Survey, Statistics centroid locations, Nearest Neighbors Revisited: Clustering Around Centroids centroid-based clustering, Example: Clustering Business News Stories centroids, Nearest Neighbors Revisited: Clustering Around Centroids–Nearest Neighbors Revisited: Clustering Around Centroids, Example: Clustering Business News Stories–The news story clusters characteristics, Answering Business Questions with These Techniques characterizing customers, Answering Business Questions with These Techniques churn, Example: Predicting Customer Churn, Data Mining and Data Science, Revisited, Problems with Unbalanced Classes and expected value, Using Expected Value to Frame Classifier Evaluation finding variables, Data Mining and Data Science, Revisited performance analytics for modeling, Example: Performance Analytics for Churn Modeling–Example: Performance Analytics for Churn Modeling churn prediction, Thinking Data-Analytically, Redux Ciccarelli, Francesca, Hierarchical Clustering class confusion, The Confusion Matrix class labels, * Logistic Regression: Some Technical Details–* Logistic Regression: Some Technical Details class membership, estimating likelihood of, Example: Targeting Online Consumers With Advertisements class priors, Costs and benefits, ROC Graphs and Curves, ROC Graphs and Curves, Cumulative Response and Lift Curves class probability, The Ubiquity of Data Opportunities, From Business Problems to Data Mining Tasks, Class Probability Estimation and Logistic “Regression”–Example: Logistic Regression versus Tree Induction, Bias, Variance, and Ensemble Methods classes exhaustive, Conditional Independence and Naive Bayes mutually exclusive, Conditional Independence and Naive Bayes probability of evidence given, Conditional Independence and Naive Bayes separating, Example: Overfitting Linear Functions classification, The Ubiquity of Data Opportunities, From Business Problems to Data Mining Tasks, Similarity, Neighbors, and Clusters Bayes’ Rule for, Applying Bayes’ Rule to Data Science building models for, Business Understanding ensemble methods and, Bias, Variance, and Ensemble Methods neighbors and, Classification regression and, From Business Problems to Data Mining Tasks supervised data mining and, Supervised Versus Unsupervised Methods classification accuracy confusion matrix, The Confusion Matrix–The Confusion Matrix evaluating, with expected values, Using Expected Value to Frame Classifier Evaluation–Using Expected Value to Frame Classifier Evaluation measurability of, Plain Accuracy and Its Problems unbalanced classes, Problems with Unbalanced Classes–Problems with Unbalanced Classes unequal costs/benefit ratios, Problems with Unequal Costs and Benefits–Problems with Unequal Costs and Benefits classification function, Linear Discriminant Functions classification modeling, Generalizing Beyond Classification classification tasks, From Business Problems to Data Mining Tasks classification trees, Supervised Segmentation with Tree-Structured Models as sets of rules, Trees as Sets of Rules–Trees as Sets of Rules ensemble methods and, Bias, Variance, and Ensemble Methods in KDD Cup churn problem, Example: Performance Analytics for Churn Modeling–Example: Performance Analytics for Churn Modeling inducing, Supervised Segmentation with Tree-Structured Models logistic regression and, The Churn Dataset Revisited predictive models and, Supervised 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Profit Curves scores given to instances by, Ranking Instead of Classifying classifying cases, ranking vs., Ranking Instead of Classifying–Ranking Instead of Classifying climatology, Evaluation, Baseline Performance, and Implications for Investments in Data clipping dendrograms, Hierarchical Clustering cloud labor, Final Example: From Crowd-Sourcing to Cloud-Sourcing clumps of instances, Example: Overfitting Linear Functions cluster centers, Nearest Neighbors Revisited: Clustering Around Centroids cluster distortion, Nearest Neighbors Revisited: Clustering Around Centroids clustering, From Business Problems to Data Mining Tasks, Clustering–* Using Supervised Learning to Generate Cluster Descriptions, Representing and Mining Text algorithm, Nearest Neighbors Revisited: Clustering Around Centroids business news stories example, Example: Clustering Business News Stories–The news story clusters centroid-based, Example: Clustering Business News Stories creating, Hierarchical Clustering data preparation for, Data preparation–Data preparation hierarchical, Hierarchical Clustering–Hierarchical Clustering indicating, Hierarchical Clustering interpreting results of, Understanding the Results of Clustering–Understanding the Results of Clustering nearest neighbors and, Nearest Neighbors Revisited: Clustering Around Centroids–Nearest Neighbors Revisited: Clustering Around Centroids profiling and, Profiling: Finding Typical Behavior soft, Profiling: Finding Typical Behavior supervised learning and, * Using Supervised Learning to Generate Cluster Descriptions–* Using Supervised Learning to Generate Cluster Descriptions whiskey example, Example: Whiskey Analytics Revisited–Hierarchical Clustering clusters, Similarity, Neighbors, and Clusters, Understanding the Results of Clustering co-occurrence grouping, From Business Problems to Data Mining Tasks–From Business Problems to Data Mining Tasks, Co-occurrences and Associations: Finding Items That Go Together–Associations Among Facebook Likes beer and lottery example, Example: Beer and Lottery Tickets–Example: Beer and Lottery Tickets eWatch/eBracelet example, Co-occurrences and Associations: Finding Items That Go Together–Co-occurrences and Associations: Finding Items That Go Together market basket analysis, Associations Among Facebook Likes–Associations Among Facebook Likes surprisingness, Measuring Surprise: Lift and Leverage–Measuring Surprise: Lift and Leverage Coelho, Paul, Example: Evidence Lifts from Facebook “Likes” cognition, Machine Learning and Data Mining Coltrane, John, Example: Jazz Musicians combining functions, Nearest Neighbors for Predictive Modeling, * Combining Functions: Calculating Scores from Neighbors–* Combining Functions: Calculating Scores from Neighbors common tasks, From Business Problems to Data Mining Tasks–From Business Problems to Data Mining Tasks, From Business Problems to Data Mining Tasks communication, between scientists and business people, Superior Data Science Management, The Fundamental Concepts of Data Science company culture, as intangible asset, Unique Intangible Collateral Assets comparisons, multiple, * Avoiding Overfitting for Parameter Optimization–* Avoiding Overfitting for Parameter Optimization complex functions, Overfitting in Mathematical Functions, Example: Overfitting Linear Functions complexity, Learning Curves complexity control, Overfitting Avoidance and Complexity Control–* Avoiding Overfitting for Parameter Optimization, * Avoiding Overfitting for Parameter Optimization ensemble method and, Bias, Variance, and Ensemble Methods nearest-neighbor reasoning and, Geometric Interpretation, Overfitting, and Complexity Control–Geometric Interpretation, Overfitting, and Complexity Control complications, Selecting Informative Attributes comprehensibility, of models, Evaluation computing errors, Regression via Mathematical Functions computing likelihood, * Logistic Regression: Some Technical Details conditional independence and Bayes’ Rule, Bayes’ Rule unconditional vs., Conditional Independence and Naive Bayes conditional probability, Combining Evidence Probabilistically conditioning bar, Combining Evidence Probabilistically confidence, in association mining, Co-occurrences and Associations: Finding Items That Go Together confusion matrix and points in ROC space, ROC Graphs and Curves evaluating models with, The Confusion Matrix–The Confusion Matrix expected value corresponding to, Profit Curves produced by classifiers, Ranking Instead of Classifying–Ranking Instead of Classifying true positive and false negative rates for, ROC Graphs and Curves constraints budget, Profit Curves workforce, Profit Curves consumer movie-viewing preferences example, Data Reduction, Latent Information, and Movie Recommendation consumer voice, From Big Data 1.0 to Big Data 2.0 consumers, describing, Example: Targeting Online Consumers With Advertisements–Example: Targeting Online Consumers With Advertisements content pieces, online consumer targeting based on, Example: Targeting Online Consumers With Advertisements context, importance of, Why Text Is Difficult control group, evaluating data models with, Flaws in the Big Red Proposal converting data, Data Preparation cookies, browser, Example: Targeting Online Consumers With Advertisements corpus, Representation correlations, From Business Problems to Data Mining Tasks, Statistics causation vs., The news story clusters general-purpose meaning, Statistics specific technical meaning, Statistics cosine distance, * Other Distance Functions, * Other Distance Functions cosine similarity, * Other Distance Functions Cosine Similarity function, Example: Jazz Musicians cost matrix, Profit Curves cost-benefit matrix, Costs and benefits, Costs and benefits, Costs and benefits costs and underlying profit calculation, ROC Graphs and Curves estimating, Costs and benefits in budgeting, Ranking Instead of Classifying of data, Data Understanding counterfactual analysis, From Business Problems to Data Mining Tasks Cray Computer Corporation, The Data credit-card transactions, Data Understanding, Profiling: Finding Typical Behavior creditworthiness model, as example of selection bias, A Brief Digression on Selection Bias CRISP cycle, Implications for Managing the Data Science Team approaches and, Implications for Managing the Data Science Team strategy and, Implications for Managing the Data Science Team CRISP-DM, Data Mining and Data Science, Revisited, The Data Mining Process Cross Industry Standard Process for Data Mining (CRISP), Data Mining and Data Science, Revisited, The Data Mining Process–Deployment, The Data Mining Process business understanding, Business Understanding–Business Understanding data preparation, Data Preparation–Data Preparation data understanding, Data Understanding–Data Understanding deployment, Deployment–Deployment evaluation, Evaluation–Evaluation modeling, Modeling software development cycle vs., Implications for Managing the Data Science Team–Implications for Managing the Data Science Team cross-validation, From Holdout Evaluation to Cross-Validation, Summary beginning, From Holdout Evaluation to Cross-Validation datasets and, From Holdout Evaluation to Cross-Validation nested, A General Method for Avoiding Overfitting overfitting and, From Holdout Evaluation to Cross-Validation–From Holdout Evaluation to Cross-Validation cumulative response curves, Cumulative Response and Lift Curves–Cumulative Response and Lift Curves curse of dimensionality, Dimensionality and domain knowledge customer churn example analytic engineering example, Our Churn Example Revisited with Even More Sophistication–From an Expected Value Decomposition to a Data Science Solution and data firm maturity, A Firm’s Data Science Maturity customer churn, predicting, Example: Predicting Customer Churn with cross-validation, The Churn Dataset Revisited–The Churn Dataset Revisited with tree induction, Example: Addressing the Churn Problem with Tree Induction–Example: Addressing the Churn Problem with Tree Induction customer retention, Example: Predicting Customer Churn customers, characterizing, Answering Business Questions with These Techniques D data as a strategic asset, Data and Data Science Capability as a Strategic Asset converting, Data Preparation cost, Data Understanding holdout, Holdout Data and Fitting Graphs investment in, From an Expected Value Decomposition to a Data Science Solution labeled, Models, Induction, and Prediction objective truth vs., What Data Can’t Do: Humans in the Loop, Revisited obtaining, From an Expected Value Decomposition to a Data Science Solution training, Introduction to Predictive Modeling: From Correlation to Supervised Segmentation, Models, Induction, and Prediction data analysis, Example: Predicting Customer Churn, From Business Problems to Data Mining Tasks data exploration, Stepping Back: Solving a Business Problem Versus Data Exploration–Stepping Back: Solving a Business Problem Versus Data Exploration data landscape, Hierarchical Clustering data mining, Business Problems and Data Science Solutions–Summary and Bayes’ Rule, Applying Bayes’ Rule to Data Science applying, Answering Business Questions with These Techniques–Answering Business Questions with These Techniques, Supervised Segmentation as strategic component, Data-Analytic Thinking CRISP codification of, The Data Mining Process–Deployment data science and, The Ubiquity of Data Opportunities, Data Mining and Data Science, Revisited–Data Mining and Data Science, Revisited domain knowledge and, Dimensionality and domain knowledge early stages, Supervised Versus Unsupervised Methods fundamental ideas, Supervised Segmentation with Tree-Structured Models implementing techniques, Data Processing and “Big Data” important distinctions, Data Mining and Its Results matching analytic techniques to problems, Other Analytics Techniques and Technologies–Answering Business Questions with These Techniques process of, The Data Mining Process–Deployment results of, Data Mining and Its Results–Data Mining and Its Results, Deployment skills, Implications for Managing the Data Science Team software development cycle vs., Implications for Managing the Data Science Team–Implications for Managing the Data Science Team stages, Data Mining and Data Science, Revisited structuring projects, Business Problems and Data Science Solutions supervised vs. unsupervised methods of, Supervised Versus Unsupervised Methods–Supervised Versus Unsupervised Methods systems, Deployment tasks, fitting business problems to, From Business Problems to Data Mining Tasks–From Business Problems to Data Mining Tasks, From Business Problems to Data Mining Tasks techniques, Deployment Data Mining (field), Machine Learning and Data Mining data mining algorithms, From Business Problems to Data Mining Tasks data mining proposal example, Example Data Mining Proposal–Flaws in the Big Red Proposal data preparation, Data Preparation, Representing and Mining Text data preprocessing, Data Preprocessing–Data Preprocessing data processing technologies, Data Processing and “Big Data” data processing, data science vs., Data Processing and “Big Data”–Data Processing and “Big Data” data reduction, From Business Problems to Data Mining Tasks–From Business Problems to Data Mining Tasks, Data Reduction, Latent Information, and Movie Recommendation–Data Reduction, Latent Information, and Movie Recommendation data requirements, Data Preparation data science, Introduction: Data-Analytic Thinking–Summary, Data Science and Business Strategy–A Firm’s Data Science Maturity, Conclusion–Final Words and adding value to applications, Decision Analytic Thinking I: What Is a Good Model?

pages: 330 words: 59,335

The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success
by William Thorndike
Published 14 Sep 2012

Smith leveraged his real estate expertise to creatively finance the purchase via a sale/leaseback of ABC’s manufacturing facilities (he is still justifiably proud of this coup). Smith had grown up in the bricks-and-mortar world of movie theaters, and ABC was his first exposure to the value of businesses with intangible assets, like beverage brands. Smith grew to love the beverage business, which was an oligopoly with very high returns on capital and attractive long-term growth trends. He particularly liked the dynamics within the Pepsi bottler universe, which was fragmented and had many second- and third-generation owners who were potential sellers (unlike the Coke system, which was dominated by a smaller number of large independents).

pages: 197 words: 59,946

The Thank You Economy
by Gary Vaynerchuk
Published 1 Jan 2010

When I started out, I didn’t have the name recognition of Robert Parker, or the clout of Wine Spectator, so I didn’t talk about Gary Vaynerchuk or Wine Library—I talked about Chardonnay. Social media gives you the opportunity to take your business to its fullest potential. Grab it. The Answer Is Always the Same I think we’re entering a business golden age. It took a long time for people to recognize the value of intellectual capital, whose intangible assets don’t show up on a spreadsheet, couldn’t be tracked, and couldn’t be expressed in dollars. Now it’s widely understood that intellectual capital is part of the backbone of every organization, and worth protecting. While the ability to form relationships has always been considered a subset of intellectual capital, social media has catapulted that skill into a wealth-building category.

pages: 241 words: 63,981

Dirty Secrets How Tax Havens Destroy the Economy
by Richard Murphy
Published 14 Sep 2017

The tax haven is thus, once again, only a conduit – or, as Ronen Palan calls it, a ‘booking location’. Other than cash and shares, the most common assets recorded as held in tax havens are property, in the form of the title to land and buildings; shares in private companies; and other tangible assets, such as art, yachts and the like as well as intangible assets such as patents and copyrights. In each case, it is very unlikely that the assets recorded as being owned in the tax haven will have ever had anything to do with it, or will ever (even in the case of some yachts) have been near it. All that the tax haven does is provide an opportunity to record the legal ownership of these assets.

pages: 195 words: 63,455

Damsel in Distressed: My Life in the Golden Age of Hedge Funds
by Dominique Mielle
Published 6 Sep 2021

The partners were familiar with MCI from their days at Drexel Burnham Lambert, when MCI had been a pioneer junk bond issuer. We doubled down. We bought significantly more bonds at twenty cents. The bankruptcy was long and complicated, starting with a new CEO from Compaq and the write-off of $80 billion of goodwill, intangible assets, property, and equipment. The next step was to settle charges of accounting fraud with the different parties: the SEC and the Oklahoma attorney general (where the campus was based). The plan was to emerge with a long-distance business under the MCI name and let the tainted WorldCom brand die in the process.

pages: 614 words: 168,545

Rentier Capitalism: Who Owns the Economy, and Who Pays for It?
by Brett Christophers
Published 17 Nov 2020

Such companies are prime examples of what I described in the Preface as balance-sheet capitalists. Figure 3.3 shows the estimated value of proprietary IP assets alongside non-IP assets for a selection of the leading UK IP rentiers mentioned above, and clearly demonstrates the disproportionate importance of the former category.19 Note the presence of an important but awkward form of intangible asset on the balance sheets of all three: ‘goodwill’. If one company acquires another and the purchase consideration is greater than the cumulative value of the acquired company’s separately identifiable assets (minus its liabilities), goodwill – representing the ‘excess’ amount – arises, and must be accounted for.

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‘McDonald’s Corporation Form 10-K: Annual Report for the Fiscal Year Ended December 31, 2018’, p. 44. 12. EPO and EUIPO, ‘Intellectual Property Rights Intensive Industries and Economic Performance in the European Union’, October 2016, p. 88 – pdf available at euipo. europa.eu. 13. Ibid., p. 7. 14. On these assumptions, see P. Goodridge, J. Haskel and G. Wallis, Estimating UK Investment in Intangible Assets and Intellectual Property Rights (Newport: Intellectual Property Office, 2014). 15. S. Turnock, ‘IP and the Intangible Economy’, 20 March 2018, at ipo.blog.gov.uk. 16. Intellectual Property Office, Trends at Intellectual Property Office UK 1995–2017 (Newport: Intellectual Property Office, 2018), pp. 1–2. 17.

pages: 281 words: 71,242

World Without Mind: The Existential Threat of Big Tech
by Franklin Foer
Published 31 Aug 2017

To outmaneuver the IRS and European collectors, Amazon hatched Project Goldcrest. The code name referenced the national bird of Luxembourg. In 2003, the company sought out a deal with the Grand Duchy. As a reward for building a headquarters there, it would pay hardly any tax. Once Amazon set up shop in Luxembourg, it transferred a vast swath of its intangible assets there—vital software, trademarks, and other shards of intellectual property. Truly, these assets exist in no particular country—does one-click shopping really have a physical location?—but they have a basis in contracts, and those contracts are the basis for taxation. Amazon devised a labyrinthine corporate structure, a dizzying network of subsidiaries and holding companies.

pages: 295 words: 66,824

A Mathematician Plays the Stock Market
by John Allen Paulos
Published 1 Jan 2003

As with all such strategies, however, the increased returns tended to shrink as more people adopted it. A ratio that seems to be more strongly related to increased returns than price-to-dividends or price-to-earnings is the price-to-book ratio, P/B. The denominator B is the company’s book value per share—its total assets minus the sum of total liabilities and intangible assets, divided by the number of shares. The P/B ratio changes less over time than does the P/E ratio and has the further virtue of almost always being positive. Book value is meant to capture something basic about a company, but like earnings it can be a rather malleable number. Nevertheless, a well-known and influential study by the economists Eugene Fama and Ken French has shown P/B to be a useful diagnostic device.

The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk
by William J. Bernstein
Published 12 Oct 2000

Bid price: A broker’s price to buy a stock or bond. Bond: Debt issued by a corporation or governmental entity. Carries a coupon, or the amount of interest it yields. Bonds are usually of greater than one-year maturity. (Treasury securities of 1–10 years’ maturity are called notes.) Book value: A company’s assets minus intangible assets and liabilities; very roughly speaking, a company’s net assets. Capital asset pricing model (CAPM): A theory relating risk and expected return. Basically, it states that the return of a security or portfolio is equal to the risk-free rate plus a risk premium defined by Glossary 189 its beta.

pages: 232 words: 70,361

The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay
by Emmanuel Saez and Gabriel Zucman
Published 14 Oct 2019

On the notion of commercialization of state sovereignty, see Palan (2002). 17. Tørsløv, Wier, and Zucman (2018). Chapter 5: SPIRAL 1. The income earned by self-employed workers is mixed in the sense that it conceptually corresponds to both a payment for their work (time spent curing patients or performing legal services) and their capital (medical devices, intangible assets such as the brand value of a law firm). Attributing 70% of self-employment income to labor is somewhat arbitrary, but because most workers are salaried individuals (not self-employed), varying this assumption is largely immaterial. 2. In public financial statements, total labor costs are not reported separately (they are lumped with other costs under “costs of goods sold”).

pages: 295 words: 66,912

Walled Culture: How Big Content Uses Technology and the Law to Lock Down Culture and Keep Creators Poor
by Glyn Moody
Published 26 Sep 2022

At least when the UK government came to passing its national orphan works legislation, it recognised that there was an important economic dimension to the problem: “The Government’s position, following the Hargreaves Review, is that it benefits no-one to have a wealth of copyright works be entirely unusable under any circumstances because the owner of one or more rights in the work cannot be contacted. This is not simply a cultural issue; it is also a very real economic issue that potentially valuable intangible assets are not being used, and an issue of respect for copyright if they are being used unlawfully. The Government therefore proposed an orphan works scheme that allows for both commercial and cultural uses of orphan works, subject to satisfactory safeguards for the interests of both owners of ‘orphan rights’ and rights holders who could potentially suffer from unfair competition from an orphan works scheme.”46 A press release from the UK government in October 2014 claimed that the new UK licensing scheme, brought in to address the orphan works problem, ‘could give wider access to at least 91 million culturally valuable creative works—including diaries, photographs, oral history recordings and documentary films.’47 In 2019, Merisa Martinez48 of the Swedish School of Library and Information Science and Melissa Terras49 of the College of Arts, Humanities and Social Sciences University of Edinburgh, looked at how things had gone in the four years since the UK Orphan Works Licensing Scheme had started operation: “As of October 2018, 144 licenses have been granted of a total of 877 items.

J.K. Lasser's Your Income Tax 2022: For Preparing Your 2021 Tax Return
by J. K. Lasser Institute
Published 21 Dec 2021

Installment sale A sale of property that allows for tax deferment if at least one payment is received after the end of the tax year in which the sale occurs. The installment method does not apply to year-end sales of publicly traded securities. Dealers may not use the installment method. Investors with very large installment balances could face a special tax; see 5.21. Intangible assets Intangible assets that come within Section 197, such as goodwill, are amortizable over a 15-year period; see 42.17. Inter vivos or lifetime trust A trust created during the lifetime of the person who created the trust. If irrevocable, income on the trust principal is generally shifted to the trust beneficiaries; see 39.6.

…

If the useful life of an item is less than a year, its cost, including sales tax on the purchase, is deductible. Otherwise, you generally may recover your cost only through depreciation except to the extent first-year expensing (42.3) or bonus depreciation (42.30) applies. IRS regulations provide safe harbors, including a “12-month” rule, for expenditures relating to intangible assets or benefits (40.3). Expenses while you are not in business. You are not allowed to deduct business expenses incurred during the time you are not engaged in your business or profession. Caution Penalties and Fines Penalties or fines paid to a government agency because of a violation of any law are not deductible.

…

In the case of art objects and antiques used as business assets, the useful life requirement remains relevant because such assets are not subject to exhaustion, wear or tear, or obsolescence. The IRS may continue to dispute and litigate cases in which depreciation is claimed on assets with indeterminable useful lives. For example, in a private ruling, the IRS did not allow a developer to depreciate street improvements that had been turned over to a city. The improvements were an intangible asset that improved the developer's access to its real estate projects, but this asset had an unlimited life. There was no determinable useful life because the city had agreed to maintain and replace the improvements as necessary, and there was no evidence that the city would ever assess the developer for replacement costs.

pages: 322 words: 77,341

I.O.U.: Why Everyone Owes Everyone and No One Can Pay
by John Lanchester
Published 14 Dec 2009

GROUP COMPANY 2007 £m 2006 £m 2007 £m 2006 £m ASSETS Cash and balances at central banks 17,866 6,121 — — Treasury and other eligible bills subject to repurchase agreements 7,090 1,426 — — Other treasury and other eligible bills 11,139 4,065 — — Treasury and other eligible bills 18,229 5,491 — — Loans and advances to banks 219,460 82,606 7,686 7,252 Loans and advances to customers 829,250 466,893 307 286 Debt securities subject to repurchase agreements 100,561 58,874 — — Other debt securities 175,866 68,377 — — Debt securities 276,427 127,251 — — Equity shares 53.026 13.504 — — Investments in Group undertakings — — 43,542 21,784 Settlement balances 16,589 7,425 — — Derivatives 337,410 116,681 173 — Intangible assets 48,492 18,904 — — Property, plant and equipment 18,750 18,420 — — Prepayments, accrued income and other assets 19,066 8,136 127 3 Assets of disposal groups 45,954 — — — TOTAL ASSETS 1,900,519 871,432 51,835 29,325 LIABILITIES Deposits by banks 312,633 132,143 5,572 738 Customer accounts 682,365 384,222 — — Debt securities in issue 273,615 85,963 13,453 2,139 Settlement balances and short positions 91,021 49,476 — — Derivatives 332,060 118,112 179 42 Accruals, deferred income and other liabilities 34,024 15,660 8 15 Retirement benefit liabilities 496 1,992 — — Deferred taxation 5,510 3,264 3 — Insurance liabilities 10,162 7,456 — — Subordinated liabilities 37,979 27,654 7,743 8,194 Liabilities of disposal groups 29,228 — — — Total liabilities 1,809,093 825,942 26,958 11,128 Minority interests 38,388 5,263 — — Equity owners 53,038 40,227 24,877 18,197 TOTAL EQUITY 91,426 45,490 24,877 18,197 TOTAL LIABILITIES AND EQUITY 1,900,519 871,432 51,835 29,325 Our business school chums will have no trouble working this one out: from the huge levels of assets and liabilities and the fact that the main category of liabilities is customer deposits, it will be immediately apparent that this business is a bank.

pages: 209 words: 80,086

The Global Auction: The Broken Promises of Education, Jobs, and Incomes
by Phillip Brown , Hugh Lauder and David Ashton
Published 3 Nov 2010

This requires elaborate accounting systems and mecha- Digital Taylorism 67 nisms of control that safeguard property rights. It is these concerns that are shaping the direction of technological and organizational change. If the proﬁtability of companies depends on the productivity of knowledge, companies confront the problem of imposing their property rights over intangible assets and of how to manage what resides in their employees’ heads. This is a variation on the age-old issue of how to convert an individual’s capacity to think and act into added value for the company. For this reason, some management scholars, including Barbro Anell and Timothy Wilson, argue that the question of how to extract and distribute knowledge efﬁciently will not be answered by relying on the initiative and intellectual capital of knowledge workers, as it is difﬁcult to control, standardize, or proﬁt from ideas that remain in the heads of individual workers.

pages: 273 words: 21,102

Branding Your Business: Promoting Your Business, Attracting Customers and Standing Out in the Market Place
by James Hammond
Published 30 Apr 2008

11 concepts and ideas – something positively encouraged by the organisation and by founder Richard Branson, himself a powerful brand.) That’s not all. When your brand is strong, it’s actually worth something and becomes part of the intellectual property on your balance sheet. Valuation of brands as intangible assets has become a major area of focus for investors and shareholders. In 2005, for example, Interbrand/Business Week estimated the value of Coca-Cola’s brand (no, not the drink, or the bottling plants or the ofﬁce furniture) to be a staggering $67.5 billion! By the time this book is published, it may well be that Microsoft has easily exceeded that valuation.

pages: 244 words: 79,044

Money Mavericks: Confessions of a Hedge Fund Manager
by Lars Kroijer
Published 26 Jul 2010

Essentially the MSCI World consists of 45 individual country index exposures, and deselecting one or several of those to suit the individual investor would administratively be a fairly simple thing to do. Similarly you could tailor the non-equity part of the portfolio. Taking this a stage further, you could analyse all the assets of the person or entity to figure out where there is existing exposure. This could include looking at things like your house, education, stock options, intangible assets (what you are good at, etc.), future inheritance, etc. and could even go as far as seeing how potential or real liabilities could be included. Again, these are important issues outside the scope of this book. A wish to the financial sector You would think that things get simple once you decide to buy an index exposure, but unfortunately not so.

pages: 253 words: 79,214

The Money Machine: How the City Works
by Philip Coggan
Published 1 Jul 2009

In the financial markets they are used by those concerned about movements in interest rates, currencies and stock indices GEARING The ratio between a company’s debt and equity. See also leverage GILTS Bonds issued by the UK government GOLDEN HELLO Payment made to an employee of a rival firm to entice him or her to transfer. One of a whole range of City perks, including golden handcuffs and golden parachutes GOODWILL An accounting term which describes the intangible assets of a company (e.g. brand names, the skill of the staff) GOWER REPORT Produced in 1984, its recommendations were the basis of the new regulatory structure in the City GROSS YIELD TO REDEMPTION The return which an investor will receive on a bond, allowing for both interest and capital growth, as a percentage of the bond’s price HEDGE FUNDS Private investment vehicles that use borrowed money and shorting (see below) in order to earn returns in both bull and bear markets HEDGING The process whereby an institution buys or sells a financial instrument in order to offset the risk that the price of another financial instrument will rise or fall IDB Inter-dealer broker.

pages: 269 words: 77,876

Brilliant, Crazy, Cocky: How the Top 1% of Entrepreneurs Profit From Global Chaos
by Sarah Lacy
Published 6 Jan 2011

When it decided to make an eBook reader, it came to Shenzhen, found a fixer and a factory, and within nine months they had something very close to what it took Sony years to develop. In Silicon Val ey, the network is what makes the ecosystem so powerful, especial y as the region grew to rely on companies with intangible assets like software and the Web. There’s a misconception in much of the emerging world that it’s easy to start a company in Silicon Val ey, that venture capital seems to fal from the sky. But—for al the talk of the Val ey being a meritocracy—if you don’t know anyone, raising money can take as long and be as frustrating as it is anywhere.

pages: 263 words: 77,786

Tomorrow's Capitalist: My Search for the Soul of Business
by Alan Murray
Published 15 Dec 2022

As Colin Mayer pointed out in his book Prosperity, since financial and physical capital were the primary source of value in the twentieth century it was critical that they were measured well, so they could be managed well.1 But in the twenty-first century, it’s human capital, social capital, and natural capital that are in short supply. Intangible assets such as intellectual property, brand trust, and great people matter more than tangible assets such as plant, equipment, oil in the ground, or product in warehouses. And a company’s effect on the environment is just beginning to be factored into values. Creating the tools to measure returns to human capital, to society, and to the natural environment, and to hold companies accountable for their performance against these measures, will be critical to making stakeholder capitalism a reality.

pages: 240 words: 78,436

Open for Business Harnessing the Power of Platform Ecosystems
by Lauren Turner Claire , Laure Claire Reillier and Benoit Reillier
Published 14 Oct 2017

Yet today’s business is largely run as a technology advisory company rather than a digital platform. We note, however, that the firm is investing in new capabilities that may allow it to transition to a platformpowered ecosystem model. 9 Alibaba raised $25 billion on the NYSE in September 2014. 10 This is the value of the intangible asset of the brand itself. 11 At the time of writing, neither Airbnb nor Uber are quoted on the stock market, so market valuations for these firms are based on the implied value of their last private round of financing. 12 A unicorn, a legendary animal that has been described since antiquity as a beast with a pointed horn on its forehead, is notoriously difficult to find.

pages: 273 words: 87,159

The Vanishing Middle Class: Prejudice and Power in a Dual Economy
by Peter Temin
Published 17 Mar 2017

Cohen 2015a; Associated Press 2015; Dougherty 2016. 12 Personal and National Debts The discussion in part III has concentrated on tangible assets used by the low-wage sector, willingly or unwillingly: prisons, schools, bridges, and public transportation. It is now time to add some intangible assets and liabilities that affect the low-wage sector. This chapter interprets the treatment of debts in a dual economy. Individual debts are concentrated in bad mortgages and education loans. Societal debts come from the efforts of a democratic government to reduce risks for its members. Individual debts are contracted between borrowers and lenders.

pages: 292 words: 85,151

Exponential Organizations: Why New Organizations Are Ten Times Better, Faster, and Cheaper Than Yours (And What to Do About It)
by Salim Ismail and Yuri van Geest
Published 17 Oct 2014

Needless to say, given that even defining the term culture has proven enduringly difficult, this is a particularly challenging step. According to noted hotelier Chip Conley, “Culture is what happens when the boss leaves.” We think that pretty much sums it up, and would only add that culture is a company’s greatest intangible asset. (As many have observed, including Joi Ito, head of the MIT Media Lab, “Culture eats strategy for breakfast.”) From the “HP Way” and IBM’s “Think” to Google’s playrooms and Twitter’s warehouse, it is hard to overstate culture’s added value. Very few people would argue that a big part of Zappos’ success (and its billion-dollar valuation) is not due to its company culture.

pages: 310 words: 85,995

The Future of Capitalism: Facing the New Anxieties
by Paul Collier
Published 4 Dec 2018

Sometimes it is possible to detach the service from the network: train companies can compete on a shared rail network; electricity generators can compete on a shared grid. But the network itself is a natural monopoly. The emergence of the e-economy has created new network industries that can extend to global monopoly. These firms need very little capital as conventionally defined – the tangible assets of equipment and buildings. Their value is an intangible asset: their networks.8 Unlike tangible assets, these are very difficult for competitors to replicate; and, being immaterial, they have no fixed location subject to public policy. Facebook, Google, Amazon, eBay and Uber are all examples of networks that tend towards natural global monopoly in their particular niches.

pages: 327 words: 84,627

The Green New Deal: Why the Fossil Fuel Civilization Will Collapse by 2028, and the Bold Economic Plan to Save Life on Earth
by Jeremy Rifkin
Published 9 Sep 2019

At the press conference announcing the new partnership between Sidewalk Labs and Toronto, Schmidt thanked Canada for allowing Google in, saying that his company’s long-held dream had come true: for “someone to give us a city and put us in charge.”32 Writing in the Globe and Mail a year later, Jim Balsillie, the former chairman and co-CEO of Research In Motion, a company that commercializes intellectual property in more than 150 countries, summed up the significance of this first trial run in creating a privatized smart city that so excited Schmidt. Balsillie pointed out that “‘smart cities’ are the new battlefront for big tech because they serve as the most promising hotbed for additional intangible assets that hold the next trillion dollars to add to their market capitalizations.” The real commercial value, according to Balsillie, is that “‘smart cities’ rely on IP and data to make the vast array of city sensors more functionally valuable, and when under the control of private interests, an enormous new profit pool.”33 In the year since the official announcement, it has become even clearer that Sidewalk Labs wants Toronto’s blessing, but it does not relish the city’s active involvement and oversight in the build-out and management of the smart neighborhood on the waterfront.

pages: 306 words: 82,909

A Hacker's Mind: How the Powerful Bend Society's Rules, and How to Bend Them Back
by Bruce Schneier
Published 7 Feb 2023

The state first began to adapt its tax laws in the late nineteenth century, making changes to attract businesses from larger, more prosperous states like New York. Delaware became an “onshore” tax haven for US companies, not only because of the ease of doing business, but also because of the “Delaware Loophole”: the state collects zero tax on income relating to intangible assets held by a Delaware holding company. This allows companies to shift royalties and similar revenues from where they actually do business to holding companies in Delaware, where they are not taxed. But this means a loss of millions of dollars for states in which corporations are actually operating.

The Making of a World City: London 1991 to 2021
by Greg Clark
Published 31 Dec 2014

It was heavily involved in the successful Leadership, governance and policy 63 Agencies 1991 2002 Campaigns Figure 5.4: 2013 Creation of the GLA Promotional agencies and campaigns in London since 1991 bid to host the NFL’s first ever regular season game held outside the Americas at Wembley Stadium. Initially, these agencies encountered some difficulties communicating a coordinated message. The period up to 2009 only made limited use of the city’s intangible assets, from its history, to architecture and culture (see Figure 5.4). London’s susceptibility to reputational damage at the height of the financial crisis triggered a new effort to create an integrated brand message under a coalition of agencies (Sherwood, 2009b). As a result, the Promote London Council was created in 2009 as part of the new Mayor’s Economic Development Strategy, in order to properly assemble key representatives of London’s promotional agencies and business groups and create a more joined-up approach.

pages: 345 words: 87,745

The Power of Passive Investing: More Wealth With Less Work
by Richard A. Ferri
Published 4 Nov 2010

The market (or index) is assigned a beta of 1.00, so a portfolio with a beta of 1.20 would have seen its share price rise or fall by 12 percent when the overall market rose or fell by 10 percent. bid-ask spread The difference between what a buyer is willing to bid (pay) for a security and the seller’s asking (offer) price. book value A company’s assets, minus any liabilities and intangible assets. book-to-market value (BtM) The book value of a company divided by its market value. broker/broker-dealer An individual or firm that buys or sells mutual funds or other securities for the public. capital gain/loss The difference between the sale price of an asset—such as a mutual fund, stock, or bond—and the original cost of the asset.

pages: 382 words: 92,138

The Entrepreneurial State: Debunking Public vs. Private Sector Myths
by Mariana Mazzucato
Published 1 Jan 2011

As superior outcomes lead to new products and/or services that, in turn, improve the quality of lives, create new employment opportunities for the able workforce, significantly increase the nation’s foreign export and competitiveness, and then lead to significant increase in tax revenues, it is often believed that investments in innovation would eventually be reinvested in the nation’s tangible and intangible assets. Through this upward cycle of multiplying State investments in the science and technology base, the national economy would pave the way for future sustainable prosperity. And yet, the irony of these successes is that as companies such as Apple, Google, GE, Cisco etc. are flourishing financially, their home economy is struggling to find its way out of debilitating economic issues like the growing trade deficit against Asian economies, declining manufacturing activities, increasing unemployment, widening budget deficits, inequality, deteriorating infrastructure etc.

pages: 606 words: 87,358

The Great Convergence: Information Technology and the New Globalization
by Richard Baldwin
Published 14 Nov 2016

In the Dyson example, for instance, offshoring helped create new jobs and higher pay for engineers in Malmesbury. Trade policy must therefore aim at making global value chains (GVCs) work better. For G7 nations, this means writing trade rules that help their firms maximize the value of the tangible and intangible assets. To understand the point, it helps to rethink goods. One can think of a Toyota Land Cruiser not as a vehicle but rather as a bundle of Japanese labor, capital, innovation, and managerial, marketing, engineering, and production know-how. In 1982, the Land Cruiser could be exported to any nation without regard to the destination’s property rights because it was basically impossible to unbundle the inputs.

pages: 400 words: 88,647

Frugal Innovation: How to Do Better With Less
by Jaideep Prabhu Navi Radjou
Published 15 Feb 2015

But Booz & Company (now Strategy&) and innovation consultants Doblin (part of Deloitte, one of the big four professional services firms) claim that two-thirds of new products fail within two years and 96% do not generate enough sales to recoup their cost of capital. Indeed, the US generates intellectual property worth over $5 trillion, nearly 35% of its economy. But US firms waste over $1 trillion annually in underused IP – such as patents, copyrights and know-how – because they fail to extract maximum value from these intangible assets. BTG (British Technology Group), an international specialist health-care company, reports that over two-thirds of US firms own technologies they fail to exploit, and on average 35% of technologies patented by US companies are wasted because these organisations lack a clear commercial strategy.

pages: 327 words: 90,542

The Age of Stagnation: Why Perpetual Growth Is Unattainable and the Global Economy Is in Peril
by Satyajit Das
Published 9 Feb 2016

American entertainment, fashion, and style remain influential. The US has favorable demographics and is still a magnet for immigration. The country's preeminence is based on complex systems and processes that are difficult to replicate. A World Bank study estimated that 80 percent of its wealth derives from intangible assets, such as property rights, the judicial system, skills, and the knowledge and trust embedded within its society. America's ability to reinvent itself and change is crucial. Faced with massive problems of low or slowing growth, a lack of competitiveness, and excessive debt levels, Japan, Europe, and many emerging nations have struggled to agree on and implement the required reforms.

pages: 295 words: 90,821

Fully Grown: Why a Stagnant Economy Is a Sign of Success
by Dietrich Vollrath
Published 6 Jan 2020

Physical capital, by type Note: Data is from the Bureau of Economic Analysis. Each series is indexed to the total capital stock in 2009. “Residential structures” are homes. “Firm structures” are commercial real estate, including manufacturing plants, warehouses, and office buildings. “Intellectual property” includes intangible assets such as software. “Equipment” includes goods used in production such as computers, industrial machinery, and business vehicles. Equipment is the kind of thing you would normally think of as capital: bulldozers and drill presses and computers. But this stock is small compared to the structures such items are housed in.

Deep Value
by Tobias E. Carlisle
Published 19 Aug 2014

The value to be ascribed to the assets however, will vary according to their character. Graham determined the net current asset value by calculating the company’s current assets, and then deducting from that calculation all liabilities, both current and long term. Long-term asset values—for example, intangible assets and fixed assets like plants—were totally excluded from the calculation. In ordinary times, and for the vast majority of companies, the net current asset value calculated after conducting such an examination was negative, indicating a surplus of liabilities over current assets. For a small number of stocks, however, the net current asset value would be positive, indicating a surplus of cash, receivables, and inventory over all liabilities.

pages: 324 words: 89,875

Modern Monopolies: What It Takes to Dominate the 21st Century Economy
by Alex Moazed and Nicholas L. Johnson
Published 30 May 2016

Examples range from Oracle to JP Morgan to Jiffy Lube. These companies hire employees who provide services to customers. Generally, services companies fall in one of two camps. The first kind makes and sells physical services. Your car mechanic and plumber both fall into this category. The second builds human capital or intangible assets, like intellectual property, and uses those assets to sell specialized services. This type of services company includes everyone from tax attorneys to investment bankers or management consultants. These models dominated the twentieth century for a good reason: They can be very efficient.

pages: 315 words: 87,035

May Contain Lies: How Stories, Statistics, and Studies Exploit Our Biases—And What We Can Do About It
by Alex Edmans
Published 13 May 2024

Not only did I believe the rule myself, but I confidently taught it every year to my Wharton students from then on. Armed with this rule, I transformed myself from a mere finance professor into an aspiring motivational speaker and life coach. I stressed how my students could learn any skill they wanted to during their MBA – public speaking, negotiation, or cross-border differences in accounting for intangible assets – if they just believed in themselves and put in the hours. In response, I’d get knowing nods, so I was reassured that this was a truth universally acknowledged. A few years later, after I’d moved to London Business School, I took up a part-time position at Gresham College – an unusual institution that doesn’t offer degrees but only free lectures to the public.

pages: 411 words: 95,852

Britain Etc
by Mark Easton
Published 1 Mar 2012

In the nineteenth century, it was about access to and the effective use of industrial machines. In the twenty-first century, it is about access to and the effective use of knowledge. As the Economic and Social Research Council puts it: ‘Economic success is increasingly based upon the effective utilisation of intangible assets such as knowledge, skills and innovative potential as the key resource for competitive advantage.’ What do people mean by knowledge? A century ago knowledge was a tool. If you knew stuff you could use that to sell other tangible stuff. Now knowledge is increasingly the product in its own right.

All About Asset Allocation, Second Edition
by Richard Ferri
Published 11 Jul 2010

Blue Chip Stocks Common stocks of well-known companies with a history of growth and dividend payments. Bond Covenant The contractual provision in a bond indenture. A positive covenant requires certain actions, and a negative covenant limits certain actions. Book Value A company’s assets, minus any liabilities and intangible assets. Broker/Broker-Dealer An individual or firm that buys or sells mutual funds or other securities for the public. Capital Gain/Loss The difference between the sale price of an asset—such as a mutual fund, stock, or bond—and the original cost of the asset. Capital Gains Distributions Payments to mutual fund shareholders of gains realized during the year on securities that the fund has sold at a profit, minus any realized losses.

pages: 831 words: 98,409

SUPERHUBS: How the Financial Elite and Their Networks Rule Our World
by Sandra Navidi
Published 24 Jan 2017

Network strength provides network power, and the most successful executives reach the top not solely based on their analytical skills, but because of their strong relational aptitude. We all begin our professional lives with our own personal human capital, but at a certain level executives are expected to cultivate wide and deep professional networks. Relational capital is an intangible asset that reflects the value inherent in a person’s relationships. The more high-level the relationships and the greater their strength, the more valuable the “relational capital”. It is a prized asset, because in a knowledge economy where almost everything can be replicated, a person’s relationships are unique.

pages: 417 words: 97,577

The Myth of Capitalism: Monopolies and the Death of Competition
by Jonathan Tepper
Published 20 Nov 2018

Investors search for companies that achieve such scale that they become the “Low-Cost Producer.” Investors try to find firms with “High Switching Costs” that lock clients into a relationship. They try to find businesses with “Network Effects” where you win by being the only system people can use to call or pay each other, for example. They also look for industries with “Intangible Assets” such as patents that keep your competitors out by law. In the medical industry, in particular, patents allow companies to charge astronomic prices because, by law, no other companies can compete with them while they hold a patent. Company CEOs and investors are all behaving in a perfectly rational way when they buy competitors and find ways to monopolize their industries.

pages: 348 words: 97,277

The Truth Machine: The Blockchain and the Future of Everything
by Paul Vigna and Michael J. Casey
Published 27 Feb 2018

We’d need that program to be able to tell us, for example, how many Basic Attention Tokens it would take to buy the rights to a third of a Jackson Pollock painting. It would be a world of digital barter, a world without money as we know it. As far-fetched as it seems, some are already setting out to build this alternative world. In their vision, all of our physical assets—our cars, boats, houses—as well as intangible assets such as brands, can be represented as secure digital assets on an immutable blockchain and traded directly with other such assets, with their prices set by a matrix of billions of buyers and sellers. It’s an idea that has long interested Zurich-based financial technology inventor Richard Olsen, and we quoted his thoughts in the final pages of The Age of Cryptocurrency.

pages: 346 words: 97,890

The Road to Conscious Machines
by Michael Wooldridge
Published 2 Nov 2018

Companies across the world scrambled to get in on the expert systems boom, and not just software companies. By the 1980s industry was beginning to understand that knowledge and expertise were important assets that could be nurtured and developed, to profitable advantage. Expert systems seemed to make this intangible asset tangible. The concept of a knowledge-based system resonated with the then prevailing view that Western economies were entering a post-industrial period, in which new opportunities for economic development would come primarily from the so-called knowledge-based industries and services, rather than from manufacturing and other traditional industries.

pages: 378 words: 110,518

Postcapitalism: A Guide to Our Future
by Paul Mason
Published 29 Jul 2015

A study for the SAS Institute in 2013 found that, in an attempt to put a value on data, neither the cost of gathering it, nor its market value, nor the future income it might generate could be adequately calculated. Only through a form of accounting that included non-economic benefits and risks could companies actually explain to their shareholders what their data was really worth.6 The report showed that while ‘intangible assets’ were growing on US and UK company balance sheets at nearly three times the rate of tangible assets, the actual size of the digital sector in the GDP figures had remained static. So something is broken in the logic we use to value the most important thing in the modern economy. However, by any measure, it is clear that the mix of inputs has altered.

pages: 363 words: 107,817

Modernising Money: Why Our Monetary System Is Broken and How It Can Be Fixed
by Andrew Jackson (economist) and Ben Dyson (economist)
Published 15 Nov 2012

If this leads to a fall in the price of the asset then leverage will increase, requiring further asset sales – a positive feedback loop. Adrian and Shin conclude that the pro cyclical behaviour of banks in response to changes in leverage is likely to exacerbate fluctuations in asset markets. i. Technically, it is defined as Tier 1 capital ∕ (Total assets – intangible assets) – see D’Hulster (2009). Problems with intervening – unintended consequences of fiscal policy Government intervention can create problems for the economy in the long run. Taking the case of fiscal interventions first, the suggestion that the government should act counter-cyclically is relatively uncontroversial and has been standard economic practice since Keynes.

pages: 385 words: 111,807

A Pelican Introduction Economics: A User's Guide
by Ha-Joon Chang
Published 26 May 2014

A 2005 report by Christian Aid, the development charity, documents cases of under-priced exports like TV antennas from China at $0.40 apiece, rocket launchers from Bolivia at $40 and US bulldozers at $528 and over-priced imports such as German hacksaw blades at $5,485 each, Japanese tweezers at $4,896 and French wrenches at $1,089.17 The Starbucks and Google cases were different from those examples only in that they mainly involved ‘intangible assets’, such as brand licensing fees, patent royalties, interest charges on loans and in-house consultancy (e.g., coffee quality testing, store design), but the principle involved was the same. When TNCs evade taxes through transfer pricing, they use but do not pay for the collective productive inputs financed by tax revenue, such as infrastructure, education and R&D.

pages: 363 words: 109,077

The Raging 2020s: Companies, Countries, People - and the Fight for Our Future
by Alec Ross
Published 13 Sep 2021

But today, Jersey is among the world’s most popular tax havens. In late 2014, Apple had two of its three “stateless” Irish subsidiaries claim tax residence in Jersey, and then a third Irish subsidiary claimed residence in Ireland. Around the time of this restructuring, nearly $270 billion of intangible assets suddenly appeared in Ireland. This influx of wealth—more than the value of all the residential property on the island—was so significant that it boosted Ireland’s GDP by 26 percent that year. At the time, nobody was sure what had caused this economic spike. Eventually, tax experts recognized it as a sign that one of the world’s biggest companies had landed on the shores of the Emerald Isle.

pages: 297 words: 108,353

Boom and Bust: A Global History of Financial Bubbles
by William Quinn and John D. Turner
Published 5 Aug 2020

Hooley’s promotion of the Dunlop Company established the template: 101 BOOM AND BUST table 6.1 Capitalisation of cycle companies17 Number of companies established Total nominal capital (£’000s) 1895 Q1 Q2 Q3 Q4 17 12 15 26 357.5 182.5 1,624.0 1,476.1 1896 Q1 Q2 Q3 Q4 34 94 96 139 1,641.1 13,847.2 5,316.6 6,454.6 1897 Q1 Q2 156 82 7,370.0 4,763.6 671 43,033.2 Total buy a small bicycle company, issue a prospectus full of unrealistic promises, pay inﬂuential ﬁgures to support the ﬂotation and offer it to the public for a much higher price than you paid. On balance sheets, the discrepancy between the price paid by the promoter and the price offered to the public was resolved by placing unjustiﬁably large valuations on patents, or by referring to the intangible asset of ‘goodwill’.18 This practice could be incredibly lucrative: one ﬁrm was reportedly issued to the public for a price ten times as large as the promoter had paid for all its constituent private ﬁrms combined.19 The methods used in promotion could be remarkably creative. For several years before the boom, J.

pages: 460 words: 107,454

Stakeholder Capitalism: A Global Economy That Works for Progress, People and Planet
by Klaus Schwab
Published 7 Jan 2021

As co-CEO, Snabe helped implement the new strategy and was there to see its initial results. Though he stepped down in 2014, he was proud to see the company achieving its twin goals in 2018, doubling revenue and halving CO2 emissions ahead of schedule.,8,9 With that experience under its belt, he took on the challenge of transforming Mærsk. Mærsk did have one important intangible asset: a strong core of values. “The basic principle is that people can trust us,” former Chairman Arnold Mærsk Mc-Kinney Møller, and A.P.'s son, had once said. That focus on trust had helped the company build long-lasting relationships with its clients, as well as the government. Beyond that, the company was guided by five more values: “Constant Care, Humbleness, Uprightness, Our Employees, and Our Name.”10 They were officially announced when the 90-year-old Mc-Kinney Møller stepped down as chairman in 2003, but they had been present all throughout the family's leadership of the company.

pages: 403 words: 110,492

Nomad Capitalist: How to Reclaim Your Freedom With Offshore Bank Accounts, Dual Citizenship, Foreign Companies, and Overseas Investments
by Andrew Henderson
Published 8 Apr 2018

If you are planning to run a clean business and move money around easily and frequently, you will want a place that facilitates that with ease; Swiss banks, for example, tend to dislike frequent transactions. Third, what is your business about? If you own intellectual property such as patents or trademarks, that must be considered, as IP is often taxed differently. You may also need to sell any IP you own now to a new foreign company, meaning businesses with intangible assets may have more planning to do. Lastly, what is your citizenship? Citizens of the United States are subject to more restrictions than citizens of other countries when moving offshore. You will need to make sure that you tick all the boxes at home before packing your bags. You will have a clearer vision of where to plant your company’s flag once you know the answers to these questions.

pages: 460 words: 107,454

Stakeholder Capitalism: A Global Economy That Works for Progress, People and Planet
by Klaus Schwab and Peter Vanham
Published 27 Jan 2021

pages: 356 words: 106,161

The Glass Half-Empty: Debunking the Myth of Progress in the Twenty-First Century
by Rodrigo Aguilera
Published 10 Mar 2020

Perhaps liberal democracy is producing a generation of “satisfied malcontents”, rightfully angry that political elites don’t give them enough bread but enjoying the cake crumbs of liberalism (and capitalism) nonetheless. The correlation between life satisfaction and income is also problematic since it would follow that there is an incentive for satisfied people to vote for radical candidates if they have less to lose financially but more to lose with intangible assets like their status on socio-economic and cultural hierarchies. This may explain why Trump obtained higher shares of support among higher-income voters than Clinton did,36 and why studies have shown that the leave vote in Britain was more prominent among the so-called “squeezed-middle” class than the working class, which goes contrary to popular myth of poorer voters shifting to the far right.

pages: 341 words: 116,854

The Devil's Playground: A Century of Pleasure and Profit in Times Square
by James Traub
Published 1 Jan 2004

Had the city chosen to pay those costs itself—as it had in other projects, such as the recent Battery Park City in lower Manhattan—it could more readily have dictated terms to developers. But the Koch administration made the fateful decision to sacrifice a large measure of public control in exchange for private investment. In doing so, it also surrendered pieces of the sky, and of the urban landscape: intangible assets that seemed, at least to city planners, far easier to part with than money. And so the Koch administration preserved public control of the project by surrendering precious public assets. Commercial development was not only a means to some other good on 42nd Street, but an end in itself. The city had been trying since the 1960s to shift development westward; by the late 1970s, the west side of midtown retained the low scale it had had for generations, while the east side was choking on office buildings.

pages: 298 words: 43,745

Understanding Sponsored Search: Core Elements of Keyword Advertising
by Jim Jansen
Published 25 Jul 2011

Nowadays, branding is nearly anything that differentiates products or services in such a way that makes them more familiar and desirable than similar products or services [5]. Research has shown that brands have a significant impact on consumers’ perception and selection of products. Branding is a top business priority, as a brand is a company’s most valuable intangible asset [6]. Branding is an essential element in sponsored search. Branding traits are inherent to the entire process, from the search engine selection, to the search engine results page (SERP), to the individual ad, to the advertiser’s Web site. We know that brands affect searchers’ relevance judgments of results in a variety of subjective, affective, cognitive, and contextual manners [7, 8].

pages: 402 words: 110,972

Nerds on Wall Street: Math, Machines and Wired Markets
by David J. Leinweber
Published 31 Dec 2008

If the riskreward trade-off is there, these new banks could lend directly to the old banks that are solvent. As existing solvent banks regain confidence in the availability of funds, they too will start lending. The insolvent old banks will be allowed to fail gracefully, and many of their good operational, human, and intangible assets will be preserved as they are bought by the new banks. Perhaps most importantly, there is a considerable amount of private capital on the sidelines (both at home and abroad) that would love to invest in the American financial system, just not in banks with shrinking/toxic assets and uncertain access to credit.

pages: 349 words: 114,038

Culture & Empire: Digital Revolution
by Pieter Hintjens
Published 11 Mar 2013

Such digital authorities are the digital successors to the industrial-age nation-state. Digital society is not a single authority, it is many. When an authority tries to cheat, the outcome is simple: people abandon it. The freedom to leave one on-line community and go to another is unquestioned and unparalleled in the real world. Knowledge Finally, we have the intangible asset called "knowledge." Of all the websites in the world, one is precious beyond any measure, and becoming more so every day, and that is Wikipedia. Any attempt to describe how important and valuable Wikipedia is would fail by understatement. As a species, we only really have two fundamental assets: ourselves, and our knowledge.

The Global Money Markets
by Frank J. Fabozzi , Steven V. Mann and Moorad Choudhry
Published 14 Jul 2002

This is the risk that, given that a guarantee against loss is available, a firm ceases to act prudently and enters into high-risk transactions, in the expectation that it can always call on the authorities should its risk strategy land it in financial trouble. 6 304 THE GLOBAL MONEY MARKETS EXHIBIT 14.2 European Union Regulatory Capital Rules Limits Capital type Tier 1 • No limit to Tier 1 • “Esoteric” instruments such as trust-preferred securities are restricted to 15% of total Tier 1 • Equity share capital, including share premium account • Retained proﬁts • Non-cumulative preference shares and other hybrid capital securities • Bank holding’s of its own Tier 1 instruments • Goodwill and other intangible assets • Current year unpublished losses Tier 2 • Total Tier 2 may not exceed 100% of Tier 1 • Perpetual subordinated, loss-absorbing debt • Cumulative preference shares • General reserves • Revaluation reserves • Holdings of other banks’ own fund instruments in excess of 10% of the value of own capital • Holding of more than 10% of another credit institution’s own funds • Speciﬁed investments in non-consolidated subsidiaries • Qualiﬁed investments, deﬁned as a holding of more 10% of a company Upper Tier 2 Deductions Lower • Cannot exceed 50% of • Fixed maturity subordiTier 2 Tier 1 nated debt • Amount qualifying as • Perpetual subordinated capital amortizes on a non-loss absorbing debt straight-line basis in the last ﬁve years Tier 3 • Minimum 28.5% of • Trading book proﬁts • Trading book losses capital covering market • Short-term subordinated risk must be Tier 1 debt with a minimum • Tier 3 capital can only maturity of two years, cover market risk on plus a feature enabling trading books.

Human Frontiers: The Future of Big Ideas in an Age of Small Thinking
by Michael Bhaskar
Published 2 Nov 2021

Incentives for wrenching change wither in this environment – indeed, sectors that have a near miss on a major merger or acquisition remain more innovative, see more new companies and investment come in.31 The results are the pronounced shifts, already observed, towards development and away from research; pressure to return earnings to shareholders rather than reinvest them; a consolidation of big, older companies unwilling to disrupt themselves; a requirement to prove financial return that infects everything from the arts to academia.32 Over 80 per cent of the value of the S&P 500 is in intangible assets, which only makes companies want to husband and protect such assets, not radically alter them.33 The holding of such assets, including software, has moreover been correlated with decreased dynamism: sectors associated with these investments see a greater persistence of firms and less leapfrogging.34 All this creates what Mazzucato calls a ‘parasitic innovation ecosystem’, where large, powerful incumbents coast on work done elsewhere.35 Away from the glossy brochures, the phalanx of buzzword-spouting management consultants, the calendar-filling conferences, is a system both short-termist and static, risk-averse and returns-driven, timid and defensive.

pages: 458 words: 116,832

The Costs of Connection: How Data Is Colonizing Human Life and Appropriating It for Capitalism
by Nick Couldry and Ulises A. Mejias
Published 19 Aug 2019

It has to be changed into gas, plastic, chemicals, et cetera to create a valuable entity that drives profitable activity; so must data be broken down, analyzed for it to have value.”14 Data must thus be presented as an ownerless resource that can be exploited only by certain parties (what Julie Cohen calls data refineries).15 A few excerpts from a report by the Organization for Economic Cooperation and Development are worth quoting at length. Data are an intangible asset; like other information-related goods, they can be reproduced and transferred at almost zero marginal costs. So in contrast to the concept of ownership of physical goods, where the owner typically has exclusive rights and control over the good—including for instance the freedom to destroy the good—this is not the case for intangibles such as data. . . .

pages: 353 words: 355

The Long Boom: A Vision for the Coming Age of Prosperity
by Peter Schwartz , Peter Leyden and Joel Hyatt
Published 18 Oct 2000

On the other hand, many Indian graduate students learned socialist economics at the London School of Economics and came home to take prominent positions in their overly bureaucratic government. They kept applying these socialist principles long after they were discredited around the globe. India also has picked up an intangible asset virtually by osmosis. Part of the British colonial legacy was that English became the national language uniting the diverse Indian peoples, who also speak a wealth of local languages. True, English was imposed on the Indians, but as alien as the language was, it proved so useful that the Indians themselves retained it as their national language long after the British left.

pages: 476 words: 125,219

Digital Disconnect: How Capitalism Is Turning the Internet Against Democracy
by Robert W. McChesney
Published 5 Mar 2013

Faltering Innovation Confronts the Six Headwinds,” Working Paper #18315, National Bureau of Economic Research, Aug. 2012, nber.org/papers/w18315. 16. Compustat North America, Fundamentals Annual; Wharton Research Data Services (WRDS), University of Pennsylvania (retrieved June 4, 2012). 17. Andrew J. Sherman, Harvesting Intangible Assets (New York: Amacom, 2012), xi. 18. Peter H. Diamandis and Steven Kotler, Abundance: The Future Is Better Than You Think (New York: The Free Press, 2012), 9. 19. Erik Brynjolfsson and Andrew McAfee, Race Against the Machine (Lexington, MA: Digital Frontier Press, 2011), 76. 20. Jeremy Rifkin was on to this at the beginning of the digital era.

pages: 399 words: 122,688

Shoe Dog
by Phil Knight
Published 25 Apr 2016

And one day, maybe, in Japan. “Farfetched,” I wrote. “But it seems worth shooting for.” This last line was wholly truthful. It was worth shooting for. If Blue Ribbon went bust, I’d have no money, and I’d be crushed. But I’d also have some valuable wisdom, which I could apply to the next business. Wisdom seemed an intangible asset, but an asset all the same, one that justified the risk. Starting my own business was the only thing that made life’s other risks—marriage, Vegas, alligator wrestling—seem like sure things. But my hope was that when I failed, if I failed, I’d fail quickly, so I’d have enough time, enough years, to implement all the hard-won lessons.

pages: 960 words: 125,049

Mastering Ethereum: Building Smart Contracts and DApps
by Andreas M. Antonopoulos and Gavin Wood Ph. D.
Published 23 Dec 2018

Resource A token can represent a resource earned or produced in a sharing economy or resource-sharing environment; for example, a storage or CPU token representing resources that can be shared over a network. Asset A token can represent ownership of an intrinsic or extrinsic, tangible or intangible asset; for example, gold, real estate, a car, oil, energy, MMOG items, etc. Access A token can represent access rights and grant access to a digital or physical property, such as a discussion forum, an exclusive website, a hotel room, or a rental car. Equity A token can represent shareholder equity in a digital organization (e.g., a DAO) or legal entity (e.g., a corporation).

pages: 992 words: 292,389

Conspiracy of Fools: A True Story
by Kurt Eichenwald
Published 14 Mar 2005

Glisan made a short presentation, saying that demand for the company’s bonds was soft but that Enron still had more liquidity than it needed. Lay recognized Causey. In the middle of all these troubles, the company had to deal with another issue: the rules had changed for the accounting of certain intangible assets. The arcane revision meant Enron would have to report a noncash reduction in earnings of $200 million in the first quarter of 2002. But it wasn’t as bad as it could have been, Causey said. The intangible assets acquired in the purchase of Wessex Water by Azurix so many years before did not have to be written down. Causey left the meeting, and Lay turned to the most serious issue. “I would like to open up a discussion, to see if any members of the board have a recollection of obtaining any information about the financial returns earned by Andy Fastow through the LJM structures,” he said.

pages: 457 words: 128,838

The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order
by Paul Vigna and Michael J. Casey
Published 27 Jan 2015

But “smart contracts” need not be limited to finance. When paired with “smart property”—where deeds, titles, and other certifications of ownership are put in digital form to be acted upon by software—these contracts allow the automatic transfer of ownership of a physical asset such as a house or a car, or an intangible asset, such as a patent. Similarly, the software initiates the transfer when contractual obligations are met. With companies now busily putting bar codes, QR codes, microchips, and Bluetooth antennae on just about every gadget and piece of merchandise, the emerging “Internet of Things” should make it possible to transfer ownership in many kinds of physical property in this manner.

Mastering Private Equity
by Zeisberger, Claudia,Prahl, Michael,White, Bowen , Michael Prahl and Bowen White
Published 15 Jun 2017

EBITDA Multiple Enterprise value expressed as a multiple of EBITDA. Economic Net Income (ENI) Non-generally accepted accounting principles performance measure used by several listed PE firms adjusting regular net income for income taxes, non-cash charges related to vesting of equity-based compensation and amortization of intangible assets. Employee Stock Ownership Plan (ESOP) An ESOP sets aside a percentage of shares in a company to non-founder/owner employees in the form of stock options to attract, reward and retain talent. Enterprise Value (EV) A company's total value—calculated as equity value plus net debt. Environment, Social and Governance (ESG) Management Actively and systematically manage environmental, social and governance factors by establishing structured ESG programs with ESG policies and procedures being put in place.

pages: 518 words: 143,914

God Is Back: How the Global Revival of Faith Is Changing the World
by John Micklethwait and Adrian Wooldridge
Published 31 Mar 2009

Silicon Valley and Hollywood may each have their faults, but these are the clusters of excellence and innovation that most other countries want to imitate. And even old-fashioned companies are bent on mastering the intangible. Coca-Cola and Nike are in the business of selling lifestyles as much as carbonated drinks or overpriced shoes. Accenture, a management consultancy, calculates that “intangible” assets, such as brand names, now account for 70 percent of the value of companies in the S&P 500 compared with 20 percent in 1980.2 Much is made in the emerging world of America’s thirst for commodities, particularly oil. But as Benjamin Barber has argued in his prescient Jihad Versus McWorld (1995), it is America’s ability to create entertainment and information that poses the biggest problems for traditional societies.

Adam Smith: Father of Economics
by Jesse Norman
Published 30 Jun 2018

For the Obama White House’s critique of market power, see ‘Benefits of Competition and Indicators of Market Power’, US Council of Economic Advisers Issue Brief, May 2016; Jan de Loecker and Jan Eeckhout, ‘The Rise of Market Power and the Macroeconomic Implications’, NBER Working Paper 23687, August 2017. On the erosion of real wages and the loss of trust within firms, see Robert Solow, ‘The Future of Work: Why Wages Aren’t Keeping Up’, Pacific Standard, 11 August 2015 Scalability of technology platforms: this is just one aspect of the economic effects of investment in intangible assets, which now outstrips investment in tangible assets in the US and UK. For a pioneering analysis see Jonathan Haskel and Stian Westlake, Capitalism without Capital: The Rise of the Intangible Economy, Princeton University Press 2017 ‘Competition is for losers’: Peter Thiel, Wall Street Journal, 12 September 2014 Effects of information and choice overload, especially on the poor: see Sendhil Mullainathan and Eldar Shafir, Scarcity: The True Cost of Not Having Enough, Allen Lane 2013 Consumer detriment from UK retail electricity market: UK Competition and Markets Authority, Energy Market Investigation: Final Report, 24 June 2016 Volkswagen scandal: see Frank Dohmen and Dieter Hawranek, ‘Collusion between Germany’s Biggest Carmakers’, Der Spiegel, 27 July 2017, and Jack Ewing, Faster, Higher, Farther: The Inside Story of the Volkswagen Scandal, Bantam Press 2017 Limits of competition policy: recent arguments, and disparate US and EU views, are explored by John Vickers in ‘Competition Policy and Property Rights’, Economic Journal, 120.544, 2010 Hidden costs of price comparison websites: see e.g.

pages: 526 words: 144,019

A First-Class Catastrophe: The Road to Black Monday, the Worst Day in Wall Street History
by Diana B. Henriques
Published 18 Sep 2017

* * * THE FUTURES CONTRACTS that really worried the SEC’s Harold Williams and his fellow financial regulators had nothing to do with tangible commodities such as wheat or corn or even silver. These regulators were worried about “financial futures,” newly designed contracts based on the shifting prices of intangible assets in the world’s financial markets. The Treasury and the Fed were fretting about futures based on government bonds; the SEC was concerned about futures based on mortgage-backed securities and (still on the drawing board) futures based on major stock market barometers such as the Value Line index or the Dow Jones Industrial Average.

Investing Amid Low Expected Returns: Making the Most When Markets Offer the Least
by Antti Ilmanen
Published 24 Feb 2022

The Asness-Frazzini (2013) “Devil” variant agrees in lagging the book values to ensure data availability but uses the most recent market values. 10 For example, Mauboussin-Callahan (2020) writes that tangible assets, such as factories, are on the decline, while intangible spending, such as research and development, is on the rise. Intangible investments are treated as an expense on the income statement. Tangible investments are recorded as assets on the balance sheet. Thus, a company that invests in intangible assets will have lower earnings and book value than one that invests an equivalent amount in tangible assets. All this suggests that earnings and book value are losing their ability to represent economic value. While this is true, intangibles are subjective and sometimes gamed. R&D and marketing can also be wasteful or used for empire building, so spending on them is not guaranteed to be productive.

pages: 470 words: 148,444

The World as It Is: A Memoir of the Obama White House
by Ben Rhodes
Published 4 Jun 2018

She has a mind that can wrap itself around minutiae, and she had mastered the intricacies of the UN—how to navigate the various bureaucracies and procedures, how to craft a resolution, how to cajole votes. Her direct manner served her well in an environment that values strong personalities, and her relationship with Obama gave her that intangible asset that foreign governments value most: closeness to the president. We’d done some of our biggest business through Security Council resolutions on Iran sanctions and Libya, and she’d delivered. The position of UN ambassador is one of the stepping stones to secretary of state, and Susan was in a strong position if Obama was reelected.

pages: 442 words: 39,064

Why Stock Markets Crash: Critical Events in Complex Financial Systems
by Didier Sornette
Published 18 Nov 2002

In these circumstances, the buy decision is based on the belief that you are among the ﬁrst to realize that the corresponding stock is underpriced. The reverse is expected to occur if the market price is larger than the fundamental value. However, in practice, there are severe difﬁculties in obtaining a precise estimation of the fundamental value, as it is not clear how to value some of the important intangible assets of a company such as the quality of its managers, its position in its market niche, and so on. In addition, predicting future earnings and their growth is an inexact science, to say the least. This has a very important consequence that we now discuss. An important feature of our model is the nonlinear dependence of the net order size as a function of the difference between the logarithm of the price and the logarithm of the fundamental value.

pages: 693 words: 169,849

The Aristocracy of Talent: How Meritocracy Made the Modern World
by Adrian Wooldridge
Published 2 Jun 2021

Globalization reinforces the winner-takes-all effect not just by multiplying the rewards for winning but also by allowing global companies to game the tax system. Companies buy foreign companies in order to move their nominal headquarters and thereby minimize their tax obligations (‘inversion’). They also charge affiliates for using intangible assets, such as brands, intellectual property or business services, in order to shift profits around (‘transfer pricing’). Not that long ago, only the most buccaneering companies made extensive use of tax havens. Now, leading companies such as Google do. Google achieved an effective tax rate of 2.4 per cent on its non-American profits in 2007–9 by routing profits to Bermuda, via Ireland and the Netherlands, an arrangement known as a double Irish.

pages: 533

Future Politics: Living Together in a World Transformed by Tech
by Jamie Susskind
Published 3 Sep 2018

Locking inventions and creations up in patents and copyrights means that the next generation of producers must pay to build on them, which in practice may prevent them from doing so at all.66 A commons of shared cultural resources, by contrast, would allow for creative OUP CORRECTED PROOF – FINAL, 26/05/18, SPi РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 334 FUTURE POLITICS adaptation, editing, remixing, parody, co-option, correction, criticism, commentary, and customization.67 Debate over the merits of the commons will continue to rage as long as intangible assets like ideas, inventions, designs, and software grow in economic importance. Recall McAfee and Brynjolffson’s prediction that those capable of generating ‘new ideas and innovations’ will reap ‘huge rewards’.68 But justice requires us to ask: what about those who are not so capable? Or who never had the opportunity to make their ideas known?

pages: 596 words: 163,682

The Third Pillar: How Markets and the State Leave the Community Behind
by Raghuram Rajan
Published 26 Feb 2019

Put differently, corporations will adapt to effective antitrust enforcement, and given the improvements in contracting and communications, we will likely get both competition and productive efficiency at the same time. INTELLECTUAL PROPERTY AS A SOURCE OF MARKET POWER In the new economy being created by the ICT revolution, information, knowledge, creative works, and ideas—broadly termed intellectual property—are the key assets. Such intangible assets are nonrival—if I sing or listen to a song, it does not preclude you from singing or listening to that same song. If a song could be sung by anybody, the songwriter could never benefit monetarily from her creativity; without legal protection, intellectual property, especially property that needs to be used publicly, would have no value.

pages: 1,202 words: 424,886

Stigum's Money Market, 4E
by Marcia Stigum and Anthony Crescenzi
Published 9 Feb 2007

Banking in America is often referred to as a “dual” system because some banks operate under federal charters obtained from the Office of the Comptroller of the Currency (OCC), while others are chartered by the states. U.S. bank regulation comes in layers. State banks are regulated by 27 According to the Federal Reserve, tier 1 and tier 2 capital are regulatory measures. Tier 1 capital consists primarily of common equity (excluding intangible assets such as goodwill and excluding net unrealized gains on investment account securities classified as available for sale) and certain perpetual preferred stock. Tier 2 capital consists primarily of subordinated debt, preferred stock not included in tier 1 capital, and loan-loss reserves up to a cap of 1.25% of risk-weighted assets.

…

Tier 1 and Tier 2 capital are simply fancy names for the types of capital needed for firms to obtain the primary dealer designation. Tier 1 capital includes common stockholders’ equity, qualifying noncumulative perpetual preferred stock, and minority interest in the equity accounts of consolidated subsidiaries. Tier 1 capital is normally defined as the sum of core capital elements, less goodwill and other intangible assets. The Tier 2 component of a bank’s qualifying total capital may consist of supplementary capital elements such as allowance for loan and lease losses, perpetual preferred stock and related surplus, hybrid capital instruments and mandatory convertible debt securities, and term subordinated debt and intermediate term preferred stock.

pages: 603 words: 182,781

Aerotropolis
by John D. Kasarda and Greg Lindsay
Published 2 Jan 2009

The discs that end up in your PC or DVR are made of components stamped in its Asian factories, sent by plane to Orange County for final assembly, and then flown out again. Western Digital’s output is typical of American exports and manufacturing in the Instant Age. Our exports are airborne to an even greater extent than our imports—at last count around $554 billion worth, or more than half the total. As America’s intangible assets have cratered—$12 trillion in household wealth has simply evaporated—its exports of goods and services have arguably been the only thing keeping the economy afloat. (That, and government stimulus.) President Barack Obama’s prescription for a “new economic foundation” amounts to “export more and consume less”—a goal made explicit in his first State of the Union address, in which he called for a doubling of exports within five years.

pages: 602 words: 177,874

Thank You for Being Late: An Optimist's Guide to Thriving in the Age of Accelerations
by Thomas L. Friedman
Published 22 Nov 2016

Here is one way to think about it: in every major economic shift, “a new asset class becomes the main basis for productivity growth, wealth creation, and opportunity,” argued Byron Auguste, a former economic adviser to President Obama who cofounded Opportunity@Work, a social venture that aims to enable at least one million more Americans to “work, learn, and earn to their full potential” in the next decade. “In the agrarian economy, that asset was land,” Auguste said. “In the industrial economy it was physical capital. In the services economy it was intangible assets, such as methods, designs, software, and patents.” “In today’s knowledge-human economy it will be human capital—talent, skills, tacit know-how, empathy, and creativity,” he added. “These are massive, undervalued human assets to unlock”—and our educational institutions and labor markets need to adapt to that.”

pages: 272 words: 19,172

Hedge Fund Market Wizards
by Jack D. Schwager
Published 24 Apr 2012

We used to argue, why buy a piece of commercial real estate with a 6 percent cap rate or a bond with a 7 percent yield if you could buy a business like Macy’s with a 20 percent cap rate? For financial companies and banks, I use some of the following: Price/tangible book value—The tangible book value (TBV) is equal to the book value minus intangible assets, such as patents and goodwill. Assuming the loans on a bank’s balance sheet have been appropriately accounted for—a big assumption considering the events in the financial industry over the past several years—a bank trading around its TBV would represent the value at which one could theoretically liquidate the bank.

The Spirit of ST Louis
by Charles A. Lindbergh
Published 2 Jan 1953

When wings and wires hold their shape through loops, spins, and barrel rolls, they can surely carry the fuel load I'll need for a flight to Paris. 14 1 overcoat, blue 1 hat, gray felt 1 pair gloves, fur lined 1 scarf, silk 2 pair sox, wool 1 necktie, silk 1 suitcase, leather I read, upside down, the items on the clerk's sales slip. He hasn't filled in the prices yet. Good Lord, that's going to run close to a hundred dollars, and there's still my suit to pay for. Shoes and shirts are about the only things I can economize on. The ones I wear with my uniform will do. I don't like to spend money on such intangible assets as clothes. But if I'm really going to fly to Paris, I must be willing to put everything I’ve got into the project – time, energy, money, even my position as chief pilot on the airmail line. I'll hold back only enough to pay for room and board until I can get a new start flying if I fail.

pages: 782 words: 187,875

Big Debt Crises
by Ray Dalio
Published 9 Sep 2018

On July 30, as soon as Congress granted the Treasury the authority to oversee Fannie and Freddie, regulators from the Treasury began working to assess just how dire the situation was. With the help of the Fed and outside accounting specialists, Treasury officials pored over the GSEs’ books. They soon discovered that both Fannie and Freddie had been papering over massive capital losses. Once they had properly accounted for questionably valued intangible assets and improperly valued mortgage guarantees, they saw that both companies were at least tens of billions of dollars underwater. As Paulson later put it, “We’d been prepared for bad news, but the extent of the problems was startling.”33 From mid-August until the bailout, the situation was analyzed; terms were finalized on September 7.

pages: 829 words: 187,394

The Price of Time: The Real Story of Interest
by Edward Chancellor
Published 15 Aug 2022

The company’s Brazilian managers had proved more adept at borrowing and cutting costs than managing brands. In early 2019 the value of Kraft Heinz’s brands was written down by $15 billion and its share price plunged.58 This write-down was the tip of an iceberg. When a company acquires another business at a premium, an intangible asset known as ‘good will’ is recorded on its balance sheet. In more conservative times, good will was amortized gradually over the years. In the age of financial engineering, however, it remained on the balance sheet until it was deemed bad. After the latest merger mania, companies around the world reported some $7 trillion of good will on their balance sheets.

pages: 769 words: 224,916

The Bin Ladens: An Arabian Family in the American Century
by Steve Coll
Published 29 Mar 2009

They called their Delaware-registered corporation Amarco—for American Arabian Company. Salem and Khalid Bin Mahfouz each took 40 percent and Freeman took 20 percent. Freeman hoped they would enrich themselves through ambitious undertakings, mainly in commercial real estate; he discovered that Salem was averse to stocks and other intangible assets.11 Freeman introduced Salem to Donald Trump. The Bin Ladens owned a vacant tract of land near a royal palace in Riyadh, and Freeman thought the property offered “an excellent opportunity for Donald Trump to build one of his signature buildings, like the Trump Tower in New York.” When they met in Trump’s office, the developer told Salem that he was intrigued, but he would require $25,000 in cash plus two first-class tickets to Riyadh for himself and a colleague.

pages: 897 words: 260,608

Seven Pillars of Wisdom
by T. E. Lawrence
Published 29 Mar 2000

It was to be the biggest operation of the Arabs in their memory; dismissing those who saw it to their homes, with a sense that their world had changed indeed; so that there would be no more silly defections and jealousies of clans behind us in future, to cripple us with family politics in the middle of our fighting. Not that we expected immediate opposition. We bothered to take this unwieldy mob with us to Wejh, in the teeth of efficiency and experience, just because there was no fighting in the bill. We had intangible assets on our side. In the first place, the Turks had now engaged their surplus strength in attacking Rabegh, or rather in prolonging their occupied area so as to attack Rabegh. It would take them days to transfer back north. Then the Turks were stupid, and we reckoned on their not hearing all at once of our move, and on their not believing its first tale, and not seeing till later what chances it had given them.

pages: 1,336 words: 415,037

The Snowball: Warren Buffett and the Business of Life
by Alice Schroeder
Published 1 Sep 2008

*25Assuming the Dow averaged four percent a year, a partner’s thousand-dollar investment in BPL would turn into $5,604 after twenty years at nine percent—$3,413 more than the $2,191 that an owner of the Dow would have. Return to text. *26Later Remington Rand merged with Sperry and became Sperry Rand, then, after merging with Burroughs in 1986, it became Unisys. Return to text. *27If a company’s book value is $1 million and a buyer pays $3 million, the remaining $2 million is for intangible assets—some specifically identifiable, like trademarks and patents, the rest unidentifiable customer “goodwill.” Accounting rules used to require sellers to gradually charge off, or amortize, these costs over time. Return to text. *28Wite-Out and Liquid Paper are opaque correction fluids, once commonly painted over typewritten material so that words would either disappear or could be typed over.