Increasingly, intangible knowledge assets are dwarfing the value of tangible book assets at many companies. But don’t ask for details. While corporate reports heap praise on various efforts to capitalize on knowledge, they fail to supply reliable, objective benchmarks for measuring the values a company gets from its patents, brands, trademarks, capital expenditures, and research-and-development programs.
To assist financial managers in grappling with knowledge assets, CFO’s second annual Knowledge Capital Scoreboard updates and expands last year’s techniques–and its conclusions. In the 2000 edition, the methodology, designed at CFO’s request by Prof. Baruch Lev of New York University’s Stern School of Business, pierces the knowledge capital veil in more detail. Top companies in 20 industries were ranked according to their levels of knowledge capital, from a high of $211 billion at mighty Microsoft Corp., down to $332 million at our smallest knowledge-rated company, Adolph Coors Co. At our median company, $21 billion of knowledge capital amounted to three times book value.