Concept And Calculation Of Value Added Rate
Value added rate
The added value rate is the ratio of added value to sales revenue. It reflects the added value of each dollar sales revenue. Generally speaking, the more capital intensive industries are, the higher the added value of their products and the higher their net profit. On the contrary, if the capital intensive industries are relatively low, the added value of products will be lower and the net profit will be lower.
Calculation of value added rate
When investors choose to invest in projects, they are most concerned about whether they can generate high added value.
Added value is the new value created in the process of production activities.
The formula is expressed as follows:
additional
value
= pre tax net profit +
Labor cost
+ capitalized interest + rent + cost tax.
Value added
Calculation
It can be calculated by looking up profit and loss statement, management expense list and manufacturing expense schedule.
Value added ratio = value added
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