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Gross Value Added (GVA)

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Gross Value Added (GVA) GVA is arrived at by deducting from sales revenue the cost of all materials and services which were brought in from outside suppliers.

Retained Profit of a Company for a given accounting year can be derived as:

R = S – C – Dep. – W – I – T – Div.

Where,

R = Retained Profit

S = Sales Revenue

C = Bought in Cost of Materials and services

Dep. = Annual Depreciation Charge

W = Annual Wage Cost

I = Interest payable for the year

T = Annual Corporate Tax

Div. = Total Dividend payable for the year

Rearranging above, GVA can be obtained with equation

S – C = R + Dep. + W + I + T + Div.

It is very simple definition of GVA, though it may include many other things.