Which of the following is not the main factors affecting the value of Goodwill?

Efficiency of Management of non-competitive firms

The correct answer is option 4- Efficiency of Management of non-competitive firms.

Efficiency of Management of non-competitive firms is not the main factors affecting the value of Goodwill. Efficiency of Management of own firm affects goodwill value.

Goodwill is an intangible asset that represents the reputation, brand value, customer loyalty, and other non-physical assets of a business. The main factors affecting the value of goodwill are as follows:

1. Nature of business: A firm that produces high value added products or having a stable demand is able to earn more profits and therefore has more goodwill.

2. Location: If the business is centrally located or is at a place having heavy customer traffic, the goodwill tends to be high.

3. Efficiency of management: A well-managed concern usually enjoys the advantage of high productivity and cost efficiency. This leads to higher profits and so the value of goodwill will also be high.

4. Market situation: The monopoly condition or limited competition enables the concern to earn high profits which leads to higher value of goodwill.

5. Special advantages: The firm that enjoys special advantages like import licences, low rate and assured supply of electricity, long-term contracts for supply of materials, well-known collaborators, patents, trademarks, etc. enjoy higher value of goodwill.