You may have seen word in the financial reporting media lately of a study from Duff & Phelps, which found that goodwill impairment had more than doubled from 2014 ($26 billion) to 2015 ($57 billion).
That caught our eye because Calcbench has done a few studies of goodwill impairment ourselves earlier this year—and we found goodwill impairment to be considerably higher than $57 billion.
In our first look at 2015 numbers, published on April 29, we found that total goodwill impairment among all corporate filers stood at $83 billion, with a fair number of filers who still hadn’t reported their 2015 numbers. After seeing the Duff & Phelps report this week, we ran the numbers again with a complete dataset. This time total goodwill impairment stood at $92.6 billion.
So what gives?
We are not here to question Duff & Phelps’ data. We can, however, say a few points about our own data: (1) as with all Calcbench data, we can trace back every goodwill impairment number we found to the filer’s original source document filed to the SEC; and (2) if you add all the goodwill impairment charges we found that were $1 billion or more, the total equals $57.41 billion. That is very close to the $57 billion that Duff & Phelps reported.
Our analysis found 465 companies that disclosed goodwill impairment last year, from General Electric at the top of the list ($13 billion in impairments) to Enhanced Skin Products at the bottom ($2,499).
If you are a devotee of goodwill impairment and haven’t seen our original April 29 posting yet, you may want to give it a read. We found that impairment is rising overall, that the average impairment is rising, and that the percentage of filers reporting an impairment is up, too. Not too comforting.
We also did a separate post looking at 2015 impairments specifically among the S&P 500, and the “not comforting” theme shone through in that one, too. Our brothers-in-arms at Radical Compliance also published a short piece exploring what rising goodwill impairment might say about corporate management, culture, and governance.
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