Hi!
I was recently looking over some financial statements for Disney and noticed on their balance sheet they carry a significant amount of “goodwill”:
| 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|
| 31,269.0 | 80,293.0 | 77,689.0 | 78,071.0 | 77,897.0 |
As i understand, “goodwill” is added to the balance sheet when a merger/acquisition of 2 companies occurs. So, for example, if Disney bought My Cable Company for $100 million, and My Cable Company had assets of $90 million and liabilities totaling $15 million…making the present value of the company $75 million. This would mean Disney could record $25 million of “goodwill” on the balance sheet.
By this logic, does that mean Disney is continually shelling out cash for companies at a price higher than their current value? Presumably in hopes of increasing future revenues?
Thanks in advance!
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