{{One source, date=June 2010 Added value in financial analysis of shares is to be distinguished from

value added Value added is a term in economics for calculating the difference between market value of a product or service, and the sum value of its constituents. It is relatively expressed by the supply-demand curve for specific units of sale. Value added ...

. It is used as a measure of

shareholder value Shareholder value is a business term, sometimes phrased as shareholder value maximization. The term expresses the idea that the primary goal for a business is to increase the wealth of its shareholders (owners) by paying dividends and/or causing th ...

, calculated using the formula: :Added Value = The selling price of a product - the cost of bought-in materials and components Added Value can also be defined as the difference between a particular product's final selling price and the direct and indirect input used in making that particular product. Also it can be said to be the process of increasing the perceived value of the product in the eyes of the consumers (formally known as the

value proposition In marketing, a company’s value proposition is the full mix of benefits or value (economics), economic value which it promises to deliver to the current and future customers (i.e., a market segment) who will buy their Product (business), product ...

). The difference is profit for the firm and its shareholders after all the costs and taxes owed by the business have been paid for that financial year. Value added or any related measure may help investors decide if this is a business that is worthwhile investing on, or that there are other and better opportunities (

fixed deposit A fixed deposit (FD) is a tenured deposit account provided by banks or non-bank financial institutions which provides investors a higher rate of interest than a regular savings account, until the given maturity date. It may or may not require th ...

debenture In corporate finance, a debenture is a medium- to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest. The legal term "debenture" originally referred to a document that either creates a debt or acknowle ...

s).

Example

A jewelry business could display products in an attractive display or offer a gift wrapping service. These changes could make customers more willing to pay a higher price for products that appear to be of higher quality.

Other consultancy measures

For other consultancy measures for shareholder value, see *

Economic value added In accounting, as part of financial statements analysis, economic value added is an estimate of a firm's economic profit, or the value created in excess of the Required rate of return, required return of the types of companies, company's sharehol ...

* Market value added

References

* Kay, J. (1993) ''Foundations of Corporate Success'', Oxford: Oxford University Press. Financial ratios Corporate development Accounting terminology