BRAND VALUATION

ACCOUTING

PUTTU GURU PRASAD

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INC GUNTUR
BRAND VALUATION
ACCOUTING
 Several major companies believe that
their brands are there most valuable
assets. This explains the increasing
importance placed on brand creation and
management . This also explains the
reason for paying vast sums of money to
acquire brand-rich companies.
BRAND VALUATION
ACCOUNTING
 The idea of brands as financial assets
emerged in mid eighties. As brands have
significant financial value, their absence from
the balance sheet distorts the true financial
position of a company. Hence ,in order to
ensure that the market valuation of a company
is reflective of its true intrinsic worth it has
become necessary for companies to determine
the values of their brands
 Brand Earnings Multiple
 An assessment of brand strength
requires detailed review of the brand, its
positioning, customer loyalty, the
markets in which it operates,
competition, stability, long-term trends,
statutory protection, brand management
by the companies, etc.
Based upon the above factors, an
appropriate multiplier is determined
Methods of Brand Valuation
 Earnings valuation method
 1.Determine the brand earnings

 2. Determine the brand strength or brand

earnings multiple
 3. Compute the brand value by
multiplying the brand earnings with the
multiple derived in step 2
Methods of Brand Valuation
 Cost method:- this method involves
stating the brand valued at its cost to the
company. This is relatively easy when
the brands are acquired. The money
paid to buy the brands can be directly
stated. It is more difficult to value the
brand when the brand has been
developed in house by the company