How do you calculate goodwill of a company on the basis of profit?

Goodwill can be calculated by assessing the excess purchase price over the fair value of a company's identifiable net assets. One common method involves using a multiple of the company's earnings or profits, such as EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), to determine a valuation based on projected future profits. This multiple is then applied to the expected future earnings to estimate overall value, from which the fair value of net assets is subtracted to derive goodwill.