Intangibles Turnover

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Definition

The amount of revenues over a company's intangibles. While a company's intangibles (goodwill, patents) don't necessarily drive revenues, goodwill is often a sizable amount of a company's balance sheet. A company with a intangibles turnover of ten means that a company's revenues are ten times higher than its average intangibles.

Decreasing intangibles turnover could indicate that a company has an artificially increased balance sheet (from goodwill), decreasing revenues, or has recently made a string of acquisitions (over the cost of carrying value) that has added to goodwill. Companies acquired over its fair value will report goodwill on its balance sheet.

Increasing intangibles turnover could indicate that goodwill has gone down (or revenues have increased more than goodwill).

For acquisitions, goodwill is included on the balance sheet as the difference between acquisition price and book value. As a result, intangibles turnover can be used for companies that frequently make acquisitions. Good acquisitions will help drive revenues and see decreasing intangibles turnover. For instance, if a company purchases a rival for a cheap acquisition price, goodwill would not be high. If this acquisition helped drive revenues, we would see a higher intangibles turnover ratio.

Formula

YCharts calculates this formula as
Quarterly = Total Revenues (Quarterly) / Average Intangibles (Of two Quarters).
TTM = Total Revenues (TTM) / Average Intangibles (TTM)

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