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Measuring the value of intellectual capital

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Sep 01, 2016

On September 1, 2016, CFO.com released an article where they discuss how modern companies have value that extends far beyond their physical assets, but corporate books don't always do a good job of capturing intellectual capital. Consultants have created an "intellectual capital index" that seeks to quantify how much of a company's value is tied up in these intangible assets.

Given the failure of accounting rules to account for the value of intellectual capital, a “workaround” metric has been created to demonstrate that value.

The metric is calculated first by coming up with a company’s “enterprise value” — market capitalization, plus outstanding debt and marketable securities, minus cash and cash equivalents.

Review the article on the CFO.com's website.

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