FiMIAM : Financial Method of Intangible Assets Measurement

FiMIAM : Financial Method of Intangible Assets Measurement

In order to overcome the weaknesses of Sveiby's Intangible Assets Monitor and other intangible assets measurements, Rodov and Leliaert have presented their Financial Method of Intangible Assets Measurement (FiMIAM) . FiMIAM links intellectual capital to the market value of companies.
The authors developed 6 steps to do this:
1. Derive the value of realized intellectual capital. This value is defined as the difference between the book- and market value of a company, adjusted by market fluctuations that are a result of investors sentiment.
2. Select the most important components of intellectual capital. These components will then be categorized into:
• Human capital
• Structural capital
• Customer capital.
3. Measure the weight of each component of intellectual capital; giving these components coefficients according to their weight.
4. Justify the weights of each component.
5. Measure the monetary value of each component.This is done by multiplying the coefficients given to each component by its realized intellectual capital value.
6. Add the intellectual capital components to the companies’ book value.
In short, he FiMIAM enables firms to find monetary values of intellectual capital; thereby it enables firms to establish balance sheets that reflect both tangible and intangible assets.
Source: Rodov, I and Philippe Leliaert (2002), “FiMIAM: Financial Method of Intangible Assets Measurement”, Journal of Intellectual Capital. Vol. 3 Issue: 3.