We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Value Added - Essay Example

Comments (0) Cite this document
Value added. Name: Institution: Tutor: Subject: Date: Value added This is an accounting measure that assesses the net worth of a business or an activity. It often excludes suppliers’ wealth creation in a business hence it assesses the net rather than the gross output…
Download full paperFile format: .doc, available for editing
Polish This Essay95.1% of users find it useful
Value Added
Read TextPreview

Extract of sample
"Value Added"

Download file to see previous pages The difference is usually seen in the quantity of the components included when calculating the value added. Two ways have been suggested when obtained the value added for an organisation. First, there is the subtraction method where purchases are deducted from sales figure. Secondly, the addition method that sums up the profits, interests, depreciation, payroll etc. The two methods are explained towards wealth creation in the additive method and distribution of wealth in the subtraction method. Either of the two methods, should give the same figure of the value added in a business (Haslam and Neale, 2000, 35) The value added is demonstrated below Gross output (A) (minus) Bought in items, services (B) -------------delivers----------Valued added--------distributed to----- wages, consumption, capital, profits In a country’s records, the gross output represents the gross income from different industries. All purchases that are made by the government are then deducted, to arrive at the value added. To understand this concept, accounting information from Walmart Company is adopted and illustrated below. Example: Walmart Company income statement has been reviewed for the years 2011 and 2010. Figures all in $million Year 2011 Year 2010 Sales revenue 421,849.0 408,085 Less :Purchases made 315,287.0 304,444.0 Value added 106,562.0 103,641.0 Expenses – wages, administration. ...
The value added per employee is obtained by dividing the figure calculated by the overall number of employees in a Company. The real value for 2011 for Walmart, would then be 106,562.0/2,100,000= $0.05 million per employee (Haslam and Neale, 2000, 55). The extent to which value added, cashflow, and profit connected to Company’s sales performance, is determined by critically analysing the realisation of the Company’s goal i.e. shareholder’s wealth creation. The value added shows the net value which excludes dealings from suppliers. The wealth so created is distributed amongst the expenditure, profits and capital of the firm. The cashflow statement shows the amount of cash that comes in the organisation e.g. from sales and cash out i.e. for the various expenditures undertaken. Cash expenditure in a company is includes: cash for investments, dividends paid, cash for operations etc. Cash inflow includes turnover, gain on sale of assets, interest income etc. To balance the cashflow, the cash outflow is subtracted from the cash inflow to get a deficit or a surplus. The resulting figure is the liquid money in the firm. This is related to the value added as both look at the company’s performance. If the resulting figure is a deficit, then the company is making losses and the performance is poor. Vice Versa is also true. True cash representation is assessed by the cashflow in and out of the Company’s operations. Any activities that do not involve cash e.g. outstanding debts, suppliers and outstanding debts are not incorporated. The cashflow depicts the true worth of a business as it paves ways for a cash budget to be created for the following year laying emphasis on the previous year’s cash spending. The shareholders of an organisation ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Value Added Essay Example | Topics and Well Written Essays - 1250 words”, n.d.)
Value Added Essay Example | Topics and Well Written Essays - 1250 words. Retrieved from https://studentshare.org/management/1438321-describe-how-value-added-is-calculated-to-what
(Value Added Essay Example | Topics and Well Written Essays - 1250 Words)
Value Added Essay Example | Topics and Well Written Essays - 1250 Words. https://studentshare.org/management/1438321-describe-how-value-added-is-calculated-to-what.
“Value Added Essay Example | Topics and Well Written Essays - 1250 Words”, n.d. https://studentshare.org/management/1438321-describe-how-value-added-is-calculated-to-what.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
The effect of Value-Added Activity Based Costing and Economic Value Added Measure and their impact on Process Improvement & Busi
The consumption based approach in this process lends interplay of the scientific approach to the process strictly on the basis of cause-and-effect relationship to the processes, rather than ’ guestimation’ (guess and estimation) in the process of allocation and apportionment, with the underlining principle of ‘traceability’.
4 Pages(1000 words)Essay
Strengths, weaknesses and uses of the Economic Value Added
In order to obtain the economic profits,the cost of capital must be less than the return on the firm’s capital employed.This paper candidly evaluates the uses of Economic Value Added model in a business as well as its strengths and weaknesses.
6 Pages(1500 words)Essay
Economic Value Added
It is the most booming metric tool used by corporations’ financial consultants in enhancing corporations’ financial conditions. This tool measure the amount of money in dollars that a business earns after the cost of capital is deducted according to Daft (2008).
3 Pages(750 words)Essay
Describe the methods used to calculate value added. How does value added contribute towards understanding the connections betwee
This value could either be for the internal publics within the business or the ones who exist outside it. The bottom line remains embedded in the fact that value is added over a period of time which makes the entire exercise of understanding the connections between business and its product markets a significant one.
6 Pages(1500 words)Essay
Describe the methods used to calculate value added. How does value added contribute towards understanding the connections betwee
By 1920, Pigou had made an interpretation of value added that comprised the ability to calculate the paycheck of a firm; while the sales turnover is not exact given that the expenditures are not considered. In this instance, he established that value added is essentially the subtraction of the output linked to the inputs.
6 Pages(1500 words)Essay
Describe the methods used to calculate value added. How does value added contribute towards understanding the connections betwe
There are several ways to calculate value added some of the ways are explained below. Value added= total labor expense + operating profit (in terms of cash) The first component if the cost and expenditures involved in hiring, wages of the workforce and difference allowances for the work force.
6 Pages(1500 words)Essay
Value Added
Theoretically, value added could be understood in terms of the different enhancements that a business puts on a particular product with the objective of increasing the value of the product. In this manner, value added is considered as a determination of the different qualities that are created on a given product or service. Value added can increase the price of a give product or its value.
6 Pages(1500 words)Essay
Describe the methods used to calculate value added. How does value added contribute towards understanding the connections betwee
It is particularly after the World War II that the United Nations went farther to develop standardised national value-added concept calculations. Value added is described as the measure of performance of a given economic entity.1 This paper describes the methods that are used to calculate the value added and the connection that a business has to its markets with respect to value added concepts.
5 Pages(1250 words)Essay
Value Added Tax
At the same time, there is a realization that though the provisions are limited to commerce in the EU, its implications extend beyond the borders of the union. One of the more controversial of these initiatives has been in the modernization of Value Added Tax (VAT) obligations for financial services and insurance markets.
10 Pages(2500 words)Essay
Value added
It should be duly noted that the greater the value-added is directly proportional to greater efficiency. Processing raw materials within the same location of extraction is more efficient and long sighted than exporting the same raw materials to be processed
1 Pages(250 words)Coursework
Let us find you another Essay on topic Value Added for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us