Impairment

A non-cash charge recorded when the carrying value of goodwill on the balance sheet exceeds its estimated recoverable amount. Goodwill impairment testing, required annually under IFRS and US GAAP, often signals that the intangible value anticipated at the time of acquisition — including synergies, customer relationships, and growth potential — has not been realised.

A reduction in the reported value of an asset on the balance sheet, typically triggered by impairment testing that reveals the asset's carrying amount exceeds its recoverable amount. Goodwill and other intangible asset write-downs often signal that the expected future benefits from a prior acquisition or investment have not materialised.

The mandatory annual assessment (and more frequent assessment when indicators exist) of whether the carrying amount of goodwill exceeds its recoverable amount. Under IAS 36, goodwill is tested at the cash generating unit level by comparing the unit's carrying amount (including allocated goodwill) with its recoverable amount.

The higher of an asset's (or cash generating unit's) fair value less costs of disposal and its value in use. Under IAS 36, an impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

The net asset value of a company as recorded on its balance sheet, calculated as total assets minus total liabilities. Book value often significantly understates the true worth of intangible-rich businesses because many intangible assets are not recognised under accounting standards.

A valuation ratio comparing a company's market capitalisation to its book value. A P/B ratio significantly above 1.0 indicates that the market recognises substantial value beyond what is recorded on the balance sheet, typically reflecting intangible assets.

The minimum amount of capital that financial institutions must hold as required by regulators, serving as a buffer against potential losses. Regulatory capital requirements influence how intangible assets — particularly goodwill — are treated on bank balance sheets and affect the valuation of financial services businesses.

The total value of a company's or fund's assets minus its liabilities. For investment funds, NAV represents the per-share or per-unit value.