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Learn how Intellectual Capital Reports help shareholders interpret intangible assets' value changes, core competencies, and future growth potentials. Discover the significance of reporting intangible assets alongside physical and financial assets.
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www.attainix.com The growing importance of Intellectual Capital • Research has shown that between 50% to 75% of the market value of companies reflect intangible assets such as innovation processes, patents, brands, trademarks, customer databases, etc. • Traditional Balance sheet only reports the value of physical and financial assets • Accounting system is not equipped to deal with Intangible assets • Shareholders have to make their own assumptions on how intangible assets have changed in value during the year • An IC Report helps in eliminating this problem
www.attainix.com How does an Intellectual Capital Report help Shareholders • An IC Report is a statement of changes in the company’s Intangible Assets • much like a Balance Sheet is a statement of Changes in the Company’s Physical and Financial Assets • Unlike physical and financial assets, intangibles cannot be valued directly. • Intangibles are represented by proxies called indicators. • The change in values of these indicators during the reporting period indicates the growth or decline in intangibles during the period
www.attainix.com How should shareholders interpret an Intellectual Capital Report • A well written IC Report has values of the intangible indicators along with a desired target • The indicators are grouped by core competencies of the company • Shareholders can use an IC report to understand whether the core competencies are generating new products and services • Sustainable core competencies drive future growth • If valuation information is published in the IC report, shareholders can also it to understand the intrinsic worth of the Company