TMB Synergy and Financial Projections
Concept of goodwill impairment test
Accounting treatment
How to calculate goodwill impairment
1
2
TMB
Make THE Difference
Components affecting goodwill impairment
Component
Terminal Value
Derivation & its effect on impairment loss
Derivation: (Net profit + non-cash item - CAPEX) / Ke - g
Note: Net profit at terminal year
FV of Net Asset
(Valuation from DCF)
BV of Net Asset
(NAV of merged bank)
Cost of equity (Ke)
Impairment loss
Assumption of impairment test
Discounted rate (ke)
9.0%1
Terminal growth rate (GDP)
3.0%
* Note: 1/Information as of Dec 2019
Terminal growth (g)
Derivation: Ke = Rf + ẞ (Equity Risk Premium)
Note: Banking Industry use Ke to justify firm value as
bank treats deposit and borrowing as working capital
instead of capital for investments
Derivation: g = Terminal growth
NAV of merged bank
Derivation: BV of assets - BV of liabilities
16View entire presentation