Measurement of intellectual capital and the analysis of its effect on performance ratios: A study on communication companies traded on BIST

There are three forms of capital in businesses; financial capital, physical capital and intellectual capital. Financial capital refers to the capital such as hard cash, bank accounts and valuable papers that business own. Physical capital is the form containing assets such as factories, lands, machinery and equipment. As for intellectual capital, it refers to intangible assets that are not material but have a significant impact on businesses's function and provide them added value. In recent years, especially in the business life that is governed by information based economy, advantageous features of intangible assets that businesses own have become more evident and the concept of intellectual capital has increased in importance. The growth of intellectual capital's importance has brought along the necessity of its management and therefore its measurement. But the non physical characteristic of the aforementioned intangible assets and their implicit nature in the business limit the measurement of intellectual capital significantly. Nowadays, although the importance of intellectual capital and its advantageous characteristic in a competition between businesses are agreed upon, there is yet to be a method of measurement that is generally accepted. In this study, various methods in question were used to measure intellectual capitals of two companies operating within communication sector, yearly comparison of the aforementioned companies were performed. In addition to this, how the intellectual capital measured by different methods affects companies' financial performances was analysed. Also the methods of measurement in use were compared and similarities between the results of these methods were examined. Keywords: Intangible Assets, Intellectual Capital, Measurement of Intellectual Capital