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GuruFocus has detected 7 Warning Signs with Western Digital Corp \$WDC.
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Western Digital Corp (NAS:WDC)
Goodwill-to-Asset
0.35 (As of Dec. 2016)

Goodwill to Asset ratio measures how much goodwill a company is recording compared to the total level of its assets. Western Digital Corp's goodwill for the quarter that ended in Dec. 2016 was \$10,005 Mil. Western Digital Corp's total assets for the quarter that ended in Dec. 2016 was \$28,975 Mil. Therefore, Western Digital Corp's Goodwill to Asset Ratio for the quarter that ended in Dec. 2016 was 0.35.

Definition

Goodwill to Asset ratio measures how much goodwill a company is recording compared to the total level of its assets.

It is calculated by dividing goodwill by total assets.

Western Digital Corp's Goodwill to Asset Ratio for the fiscal year that ended in Jun. 2016 is calculated as

 Goodwill to Asset (A: Jun. 2016 ) = Goodwill / Total Assets = 9951 / 32862 = 0.30

Western Digital Corp's Goodwill to Asset Ratio for the quarter that ended in Dec. 2016 is calculated as

 Goodwill to Asset (Q: Dec. 2016 ) = Goodwill / Total Assets = 10005 / 28975 = 0.35

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Explanation

If the goodwill-to-asset ratio increases, it can mean that the company is recording a proportionately higher amount of goodwill, assuming total assets are remaining constant. It is generally good to see a company increasing its assets regularly; however, if these increases are coming from intangible assets, such as goodwill, the increases may not be as good.

Increases in the goodwill-to-asset ratio might suggest that a company has been aggressively acquiring other firms or has seen its tangible assets decrease in value. When a large portion of total assets are attributable to intangible assets (such as goodwill), the company may be at risk of having that portion of its asset base wiped out quickly if it must record any goodwill impairments. Decreases in the goodwill-to-assets ratio suggest that the company has either written down some goodwill or increased its tangible assets.

Asset needs vary from industry to industry. This is why comparing goodwill-to-assets ratios is generally most meaningful among companies within the same industry. By comparing a company's goodwill to assets ratio to those of other companies within the same industry, investors can get a feel for how a company is managing its goodwill.

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Western Digital Corp Annual Data

 Jun07 Jun08 Jun09 Jun10 Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 goodwill2asset 0.00 0.02 0.03 0.02 0.02 0.14 0.14 0.17 0.18 0.30

Western Digital Corp Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 goodwill2asset 0.16 0.17 0.18 0.18 0.18 0.18 0.19 0.30 0.34 0.35
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