Proceedings of the 3rd European Conference on Intellectual Capital

Tatiana Garanina and Yana Pavlova
assets was identified in <strong>the</strong> metallurgy industry on <strong>the</strong> data <strong>of</strong> <strong>the</strong> Russian market, which was also
confirmed by <strong>the</strong> data <strong>of</strong> <strong>the</strong> UK market.
4. Conclusion
Intangible Assets are a company’s “weightless wealth” that helps it to obtain real pr<strong>of</strong>it. Every
company should understand that nowadays paying much attention to Value-based Management in
general and to Intangible Assets especially (as <strong>the</strong>y are <strong>the</strong> key drivers <strong>of</strong> value creation in <strong>the</strong>
economy <strong>of</strong> <strong>the</strong> XXI century) may help to create and develop its core competences and thus yield
competitive advantage on <strong>the</strong> market.
This question is discussed in different publications, where it is said about <strong>the</strong> problem that <strong>the</strong> most
important resources <strong>of</strong> a company, which are Intangible Assets, are <strong>of</strong>ten not reflected in companies’
balance-sheets [Edvinsson, Mallone, 1997; Sveiby, 1997]. That is why a new approach for obtaining a
fundamental value <strong>of</strong> intangible assets on <strong>the</strong> base <strong>of</strong> residual operating income is developed in <strong>the</strong>
paper. It helps to get <strong>the</strong> value <strong>of</strong> those intangibles which are not shown on <strong>the</strong> balance sheets <strong>of</strong>
companies. It was decided to test a hypo<strong>the</strong>sis and to compare results <strong>of</strong> influence <strong>of</strong> fundamental
value <strong>of</strong> tangible and intangible assets on market value <strong>of</strong> assets on two markets: <strong>the</strong> emerging
Russian market and <strong>the</strong> well-developed UK market.
For <strong>the</strong> research a two-factor model has been developed. The research helped to find out that,
indeed, <strong>the</strong>re is a connection between <strong>the</strong> selected indicators, but if to look at all <strong>the</strong> industries, <strong>the</strong>
connection is not strong enough. The strongest relationship was observed in <strong>the</strong> metallurgy and it was
very poor in <strong>the</strong> mechanical engineering for both markets.
The tested econometric model shows that on both markets (<strong>the</strong> UK, and <strong>the</strong> Russian one) tangible
assets still play a more important role in value creation <strong>of</strong> companies if to use <strong>the</strong> chosen method <strong>of</strong>
evaluation. Of course <strong>the</strong> method has some limitations due to <strong>the</strong> assumptions represented in <strong>the</strong>
Technical annex, but <strong>the</strong> method is very useful for obtaining $-valuation <strong>of</strong> Intangible assets for
comparing different companies and industries between each o<strong>the</strong>r. The approach highlighted in <strong>the</strong>
paper may be used by managers in order to understand what role Intangible Assets play in
company’s value creation and also to understand whe<strong>the</strong>r <strong>the</strong>ir company overplays rivals or not.
The method can also be used for external investors who may compare companies <strong>the</strong>y want to invest
in from <strong>the</strong> point <strong>of</strong> view <strong>of</strong> Intangible assets. In this case investors need only external financial
reports what makes this approach very easy to use.
The fur<strong>the</strong>r research in this field will develop not only in <strong>the</strong> direction <strong>of</strong> testing <strong>the</strong> researched models
for sustainability as statistical information accumulated, but also in <strong>the</strong> direction <strong>of</strong> developing and
testing o<strong>the</strong>r models <strong>of</strong> Intangible Assets valuation. Moreover, <strong>the</strong> question <strong>of</strong> Intangible Assets
structure demands <strong>the</strong> fur<strong>the</strong>r specification, and also <strong>the</strong> problem <strong>of</strong> extracting separate elements <strong>of</strong>
Intangible Assets from <strong>the</strong>ir aggregate value needs to be solved.
5. Technical annex
In this annex all <strong>the</strong> assumptions and formulas transformation are presented for obtaining
fundamental values <strong>of</strong> tangible and intangible assets.
Here, <strong>the</strong> residual operating income equals <strong>the</strong> residual earnings after deducting <strong>the</strong> cost <strong>of</strong> invested
capital:
BV
REOI j = NOPAT j − kW
× NA j−1
( t)
, (1a)
where NOPAT — net operating pr<strong>of</strong>it after taxes (also EBI – earnings before interest),
calculated according to <strong>the</strong> formula:
NOPAT = NI + i × 1−
, (2a)
where NI — net income
i
t
— interest
— income tax rate according to <strong>the</strong> income statement
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