VALUE-ADDED

Value-added Calculation. & Value-added, Cashflow, and Profit Connected to a Company's Sales Performance

Value-added Calculation. & Value-added, Cashflow, and Profit Connected to a Company's Sales Performance

Value Added

The added value or added value is a concept used in economics, finance , and accounting with two ways:

From the accounting point of view is the difference between the amount of sales and purchases. That is, the difference between market prices and production costs. At the corporate level - cost-benefit analysis - it is the difference between the income of a company and the costs of raw materials and capital fixed and variable. This serves, at present, the basis for the so-called value-added tax (Anctil, 1998: 231-264).

In economic terms, value added is the value that is acquired by additional goods and services to be transformed during the production process. In other words, the economic value is the value that a process of production ads to the already embodied in the raw materials used in production(Bottger, 1999; 135).

You need to keep in mind that the equality between the quantities resulting from monetary calculation and the calculation in terms of value (and potentially with those obtained from the calculation of goodwill) is an equality empirical, not theoretical: it happens that the added value "in terms of value" was sold to the value added " in terms of money" (sold at certain prices). The problem is that there is no algorithm or formula to transform generally applicable "value units" in "currency units" in other words, to solve the so-called problem of the transformation (Kramer, 1997 41-49). It has been suggested that the added value is the basis of profit, but it is possible to conceive or even find examples in which the value increases for no gain (sold at no profit) or vice versa (sold at a profit without creating value). Consequently it is important to consider when performing calculations or conceptual schemes do not mix and / or measurements and results. (Allman, 2010: 45)

The added value can be estimated for a company, a sector of the economy or a region or country, or even the international economy. The technique of Input-Output (MIP) determines the annual flow of goods and services obtained in terms of inputs or resources used from other production centers. From the standpoint of macroeconomic value added is the sum total of wages, salaries or fees, interest, rents, profits of the business and taxes collected by the State, in a given period.

Calculation of value added

The added value can be calculated in two ways, leading to the same result:

The difference between the value of production and consumption value outside the company.

The sum of the compensation received by all actors involved in the production process.

Agents among, which participants can share the value added are:

Company employees: personnel costs.

Outside capital providers: payment for loans.

Owners of the company: payment of dividends.

Government, State, payment of taxes.

The company itself: one of the added value stays in the company, it is self-financing, which may be:

Maintenance self-financing: for maintaining the productive capacity ...