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The importance of financial assets in the determination of a company's market value is decreasing fast and it is equally recognised that non‐financial (or intangible) assets are now the main drivers of performance and market value. To date, however, there exists little or no objective, quantitative measures of intangible assets, and where they are claimed to exist (e.g. in the valuation of brands, intellectual property, patents, etc.) they are very specific and limited in scope. Based on the seminal work by Leif Edvinsson at Skandia AFS, the present authors have developed a model for identifying and quantifying intangibles as components of intellectual capital (IC). This model serves to evaluate a company's return on all the capital it employs, helping to explain the difference between book and market value. It also provides guidance as to how and where management should put its attention to grow the organization's overall IC. The 4‐Leaf Model^® identifies the sources of added value and competitive advantage in businesses and in particular of virtual organizations – collaborative networks of otherwise independent economic entities – that build their business models around the Internet using minimal financial assets. The quantification of IC will be illustrated using examples of information and communication technology and financial services companies.

Today’s measurement systems fail to adequately account for intellectual capital (IC) in a transparent yet comprehensive manner. In spite of many recent attempts to qualify and sometimes quantify intangibles, there exists as yet not one standardized system that is sufficiently developed and globally accepted. The aim of the present paper is to contribute towards the creation of such a system. The financial method of intangible assets measurement (FiMIAM) presented in this paper aims to overcome some of the weaknesses of recent methods of IC valuation, and contribute to the creation of complete balance‐sheets, reflecting both the tangible and intangible assets of a company.