Visit value added is a fundamental economic concept that measures the new wealth created by the company over a financial year. Beyond its accounting dimension, it reveals the company's real capacity to transform external inputs into economic value, through the labor and capital deployed. It is one of the most telling indicators for analyzing a company's performance and comparing it with its competitors.
Definition of value added
Visit value added corresponds to the difference between the company's output and what it consumed from external third parties to achieve that output. Mathematically, it is calculated by subtracting external consumption (purchases of materials, goods, external services) from revenue or the output for the year. The result represents the wealth the company has genuinely created through its own activity.
The accounting calculation
The calculation is based on the income and expense statement. Output for the year comprises revenue excluding taxes, plus or minus the change in finished goods inventory, plus capitalized production. External consumption comprises consumed purchases of materials and goods and other external charges (services invoiced by third parties). The difference between these two aggregates constitutes the gross value added.
The distribution of value added
It represents the wealth that will be distributed among the various contributors to the business: employees through wages and social security contributions, the State through taxes and duties, capital providers through interest and dividends, and the company itself through self-financing (depreciation and retained earnings). This distribution is revealing of the company's economic and social model.
The value added ratio: a sector indicator
Visit value added ratio (value added / revenue) is a particularly telling sector indicator. A high ratio indicates a high-value activity, often associated with proprietary know-how, innovation and substantial margins. A low ratio reveals a light processing or trading activity. Consulting, software publishing and the pharmaceutical industry have high ratios; trading, certain construction sectors and food processing have more modest ratios.
The evolution of value added over time
It is a major strategic indicator. Growth in value added faster than that of revenue reveals an improvement in the substance of the business, a move upmarket, and a reduced dependence on suppliers. Slower growth, by contrast, signals a dilution of value creation, often associated with volume-driven strategies with no qualitative gain. Tracking this trend over several years is a valuable test of strategic consistency.
The split between labor and capital
The share of value added devoted to personnel costs (salaries plus social security contributions) varies significantly across sectors. Its evolution over time must be monitored. A gradual increase without productivity gains weakens profitability. An excessive reduction may signal latent social tensions or under-investment in human capital. The balance between remuneration of labor and return on capital is a central strategic issue.
Value added per employee
It is an essential productivity indicator. Calculated by dividing the value added by the average headcount, it measures the wealth created by each employee. It allows for sector comparisons, competitive benchmarking, and historical tracking of overall productivity. Sustained growth in value added per employee, combined with a dynamic social policy, is the sign of a high-performing, well-balanced company.
Value added in Moroccan obligations
In Morocco, the value added plays a particular role in the calculation of certain taxes and obligations. It appears in the statement of intermediate management balances (ESIG), which supplements the income statement, in accordance with the CGNC. Its declaration is mandatory as part of the annual tax returns. A detailed understanding of how it is formed is therefore both an internal management issue and an external compliance requirement.
Beyond the company: the macroeconomic dimension
At the macroeconomic level, the value added is the elementary building block of national wealth. The sum of the value added by all of a country's businesses approximates its Gross Domestic Product (GDP). This macroeconomic perspective sheds light on the structuring role businesses play in creating national wealth and transforming the Moroccan economy.
The AUDITIA firm supports businesses in Casablanca with the analysis of their value added and its distribution: audit, sector benchmarking, board in optimization, support for the transformation of business models.
Contact us to steer your economic performance with precision.
