1. What is direct added value (DAV)?
Some of the economic quantities used in the following sections come from general company accounting. They are explained in the glossary.
For a product and/or service, direct value added (DVA) uses two classic accounting data:
selling price (PV) ;
the purchase cost of incorporated goods and services, or direct consumption (DC), by linking them with the equation :
VAD = PV - CD (equation 1)
Semantics: the terms "product", "good" and "merchandise" are equivalent. They refer to "production" in the broadest sense.
In the 21st century, a product sold is almost always associated with a service:...
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What is direct added value (DAV)?
When should the direct value-added method be used?
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The concept was conceived and developed by Paul-Louis Brodier, an Arts & Métiers engineer and economist.
The VAD approach goes much further than what has been presented above, and covers all economic systems right down to a nation's GDP.
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