FORMULA TO CALCULATE NUMERICAL OF VALUE ADDED METHOD.

FORMULAS FOR CALCULATION OF NY BY VALUE ADDED METHODS

Three formulas: -

1. Cost based formula : -

Rent , interest, profit and Compensation of employee and mixed income.

+ Value of intermediate consumption ( Value of raw materials and other materials used)

+ Value of depreciation ( Consumption of  foxes capital )

+ Net indirect taxes ( Indirect Tax - Subsidies)

Note: Value of output is always at market price because we add NIT .
2. SALE BASED FORMULA: -
VALUE OF OUTPUT = Sale + Change in Stock (Closing stock – Opening Stock)

3. Market Price based formula: -

  Value of output  = Number of final goods X Market Price   + No. of services X Market Price  
Gross Value Added = Value of Output – Intermediate Consumption
Net Value Added at Factor Cost  OR Domestic Income  = Gross Value Added – Depreciation – NIT

Net National Income at Factor  Cost  OR National Income = Domestic Income + NFIA
Calculate of Net Value Added at factor cost.

  

•      To calculate the Net Value Added at factor cost ( Direct)

•      Value of Output = Factor cost + IC + CFC + NIT + MI (If given)

•      IMPORTANT NOTE : -

•      Net Value Added at FC will be equal to the Net Domestic Product at FC. To get the National Income at FC, NFIA to be added in Net Value added at factor cost.

Net National Income at Factor Cost = Net Value added at Factor + Net factor Income from Abroad