Question:medium

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

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Goodwill increases with strong management, good location, nature of business, and favorable market—but always within the firm itself.
Updated On: Mar 26, 2026
  • Nature of Business
  • Location
  • Market situation
  • Efficiency of Management of non-competitive firms
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The Correct Option is D

Solution and Explanation

Step 1: Identify determinants of goodwill.
Goodwill is influenced by: - Business characteristics (e.g., demand stability, profitability). - Geographic position (a prime location enhances goodwill). - Market conditions (a favorable market boosts goodwill). - Internal management effectiveness.

Step 2: Evaluate the provided choices.
- Nature of Business → significant determinant.
- Location → significant determinant.
- Market Situation → significant determinant.
- Management efficiency of external, non-competing businesses → immaterial, as goodwill pertains to the management of the business itself, not unrelated entities.

Step 3: Finalize.
Consequently, option 4 is not a primary factor.

Final Answer: \[\boxed{\text{Efficiency of Management of non-competitive firms}}\]

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