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WHAT is the added value

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What is Value Added </a>

Value added is part of the value of the product that was created in the organization.

This difference between the value of sold products and purchased goods and services.

The notion of value added

Value addedIs calculated as the difference between revenue and the value of goods and services purchased from external organizations. The latter include, in particular, the cost of raw materials and semi-finished products, repair, marketing, services, electricity costs, etc.
The added value is the value of the goods (orServices), on which the value of the goods increases during processing until it is sold to the consumer. It includes a payroll, rent, depreciation, rent, interest for using the loan, as well as the profit received.
For example, the company sold products for100 thousand rubles. To produce these products, it purchased raw materials for 30 thousand rubles, and also paid services to external contractors for 10 thousand rubles. The added value in this case is 60 thousand rubles. (100 - 30 - 10) or 60% of the cost of the final product.
Western economists also share the notion ofNegative value added, when additional processing not only adds value to the goods, but, on the contrary, reduces it. In a market economy, this phenomenon is absent and is applicable to the planned model.
In the company, value added is used in the following areas:
- salary payments (salaries, bonuses, compensations, contributions to extra-budgetary funds) -
- payment of taxes (except sales taxes and VAT) -
- payments of bank interest, dividends and other payments-
- investments in acquisition of OS, R & D and intangible assets-
- depreciation of the OS.
If after all the expenses incurred,Means, they are called Retained Value Added. The latter may be negative, when the added value is not enough to cover all expenses.

Gross value added

Distinguish the concept of gross value added,Which is calculated at the level of economic sectors. It is defined as the difference between the release of goods (services) and intermediate consumption. Summation of the gross added value of all economic sectors forms in the sum of GDP at the level of production.
Intermediate Consumption - Total CostConsumed goods and services for the production of other goods (services). This, in particular, raw materials and materials, purchased components and semi-finished products, fuel, electricity, etc.

Economic value added

Economic Value Added (EVA) is oneFrom the methods of assessing economic profit, which is used in analyzing the effectiveness of the business from the perspective of the owners. This is the company's profit from activities after deduction of taxes and reduced by investing in capital (at the expense of its own and borrowed funds).
Formula EVA = profit - taxes - capital invested in the enterprise (amount of the balance sheet liability) * weighted average price of capital.
Thus, the economic added value is less than the profit (and, correspondingly, more losses) by the amount of payment for capital.

WHAT is the added value Was last modified: May 21st, 2017 By Ramluatg
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