This is important because more companies now have more of their total assets tied up in goodwill or other intangible assets — so if you do need to declare an impairment, it can be a gut punch to the income statement. Investors do not like this, and financial analysts are always on the lookout for warning signs of impairments. 

The good news is that we have no visible shifts in market dynamics this year that suggest a wave of goodwill impairments are looming. (Compare that to, say, 2020, when the covid pandemic forced companies to declare goodwill impairments all over the place.) Still, we wanted to get a sense of companies’ overall exposure to goodwill assets, just as a thought experiment to help us understand who might be most vulnerable to impairment risk.

For example, Figure 1, below, shows the comparison of goodwill, intangible assets, and all other assets for the S&P 500 for the last five years. (Using our Bulk Data Query page, we did this in about two minutes.)

As you can see (if you squint), goodwill and other intangibles actually fell as a percentage of total assets among the S&P 500, from 14.8 percent in 2019 to 13.7 percent in 2023. Goodwill alone fell from 9.3 percent to 8.9 percent. 

OK, but perhaps that’s because S&P 500 firms tend to have large operations with lots of cash, inventory, and other physical assets. Would a larger pool of companies give a different result? Again using the Bulk Data Query page, we ran the same exercise for all non-financial companies with more than $100 million in annual revenue, about 2,100 firms in total. The result was Figure 2, below.

So we have the same pattern of goodwill and intangibles declining as a percentage of total assets over time, but they do start from a higher base: 27.4 percent of total assets in 2019, to 25.6 percent last year. What will they be for 2024 numbers? We’ll know in another five months or so.

Of course, what’s more useful to financial analysts are insights about the specific companies that have a high percentage of total assets tied up in goodwill. No fear, Calcbench can do that too! We fired up our Multi-Company page to identify those firms with the highest goodwill percentage, again looking at all non-financial firms with $100 million or more in revenue. The top 10 are in the table below.

To be clear, we have no idea whether any of these firms actually will declare goodwill impairments. We’re simply pointing out that these are the firms with an exceptionally high portion of total assets tied up in goodwill. But if you’re an analyst wondering about where goodwill impairments might send a company reeling, exercises like these are one good, logical place to begin.

All you need is the data, which Calcbench has in spades.