Calculated Intangible Value - CIV

Dictionary Says

Definition of 'Calculated Intangible Value - CIV'

A method of valuing a company's intangible assets. This calculation attempts to allocate a fixed value to intangible assets that does not change according to the company's market value. Examples of intangible assets include brand equity and proprietary technology.
Investopedia Says

Investopedia explains 'Calculated Intangible Value - CIV'

Usually a company's intangible assets are valued by subtracting a firm's book value from its market value. However, opponents of this method argue that because market value constantly changes, the value of intangible assets changes also, making it an inferior measure. Finding a company's CIV involves seven steps:

1. Calculate the average pretax earnings for the past three years.
2. Calculate the average year-end tangible assets for the past three years.
3. Calculate the company's return on assets (ROA).
4. Calculate the industry average ROA for the same three-year period as in Step 2.
5. Calculate excess ROA by multiplying the industry average ROA by the average tangible assets calculated in Step 2. Subtract the excess return from the pretax earnings from Step 1.
6. Calculate the three-year average corporate tax rate and multiply by the excess return. Deduct the result from the excess return.
7. Calculate the net present value of the after-tax excess return. Use the company's cost of capital as a discount rate.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Intangible Asset

    An asset that is ...
  2. Tangible Asset

    Assets that have ...
  3. Market Value

    1. The current ...
  4. Book Value

    1. The value at ...
  5. Return On Assets - ROA

    An indicator of ...
  6. Brand Equity

    The value ...
  7. Proprietary Technology

    A process, tool, ...
  8. Nonmonetary Assets

    Assets in which ...
  9. Operating Income

    The amount of ...
  10. Liquidity Ratios

    A class of ...

Articles Of Interest

  1. Intangible Assets Provide Real Value To Stocks

    Intangible assets don't appear on balance sheets, but they're crucial to judging a company's value.
  2. Using The Price-To-Book Ratio To Evaluate Companies

    The P/B ratio can be an easy way to determine a company's value, but it isn't magic!
  3. Use ROA To Gauge A Company's Profits

    Do you rely too heavily on ROE? Consider using return on assets for a more complete picture.
  4. Can You Count On Goodwill?

    Carefully examine goodwill and its sources before considering the value of your investment.
  5. Revenue Projections Show Profit Potential

    Examining how a company makes money can offer clues about its earnings potential.
  6. Spotting Profitability With ROCE

    This straightforward ratio measures whether a company is efficient, money-making or neither.
  7. Analyze Cash Flow The Easy Way

    Find out how to analyze the way a company spends its money to determine whether there will be any money left for investors.
  8. Digging Into Book Value

    This calculation will serve up your portion of the shareholder pie.
  9. Analyzing Retail Stocks

    To analyze retail stocks, investors need to be aware of the most common metrics used. Find out what they are.
  10. Using Enterprise Value To Compare Companies

    Learn how enterprise value can help investors compare companies with different capital structures.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center