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

value added In business, total value added is calculated by tabulating the unit value added (measured by summing unit profit sale price and production cost">Price.html" ;"title="he difference between Price">sale price and production cost], unit depreciatio ...

. It is used as a measure of

shareholder value Shareholder value is a business term, sometimes phrased as shareholder value maximization. It became prominent during the 1980s and 1990s along with the management principle value-based management or "managing for value". Definition The term "shar ...

, 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 economic value which it promises to deliver to the current and future customers (i.e., a market segment) who will buy their products and/or services. It is part of a co ...

). 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 financial instrument provided by banks or NBFCs which provides investors a higher rate of interest than a regular savings account, until the given maturity date. It may or may not require the creation of a separate accou ...

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 acknowl ...

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 *

Market value added Market value added (MVA) is the difference between the current market value of a firm and the capital contributed by investors. If MVA is positive, the firm has added value. If it is negative, the firm has destroyed value. The amount of value add ...

References

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