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# Goodwill To Assets Ratio

A ratio that measures how much goodwill a company is recording compared to the total level of its assets. The goodwill to assets ratio is useful for monitoring a company's use of goodwill. Although many companies record some form of goodwill, excessive use can lead to problems.

Goodwill to assets is calculated as:

Goodwill To Assets = Unamortized Goodwill / Total Assets

If this ratio increases, it can mean that the company is recording a proportionately higher amount of goodwill, assuming total assets are remaining constant. By comparing a company's goodwill to assets ratio to those of other companies within the same industry, investors can get a feel for how a company is managing its goodwill. It is generally good to see a company increasing its assets regularly; however, if these increases are coming from intangible assets, such as goodwill, the increases may not be as good.

Investment dictionary. . 2012.

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