Q.State any six factors determining Goodwill.

Goodwill depends on factors like location, nature of business, management efficiency, reputation, market situation and special advantages. Factors determining goodwill (any six) 1. Favourable location — a business located in a prominent, easily accessible place attracts more customers, raising its goodwill. 2. Nature of business — a business dealing in products of stable demand, or enjoying a monopoly, commands higher goodwill. 3. Efficiency of management — capable and efficient management increases profits, and hence goodwill. 4. Longer existence / reputation — a business established for a long time with a good name earns higher goodwill. 5. Favourable market situation — where competition is limited or the firm enjoys monopoly conditions, goodwill is higher. 6. Special advantages — possession of trademarks, patents, import licences, favourable long-term contracts, or well-known brand names adds to goodwill. (Other factors include quality of products, good after-sales service, capital requirement and the general risk involved in the business.) This is a standard theor …