Value Added Statement can be defined as a statement which indicates the net value or wealth created by the enterprise during a particular year. Here is the list of advantages of Value Added Statement –
1. It is an alternative performance measure to profit and therefore helps in the comparison of the performance of the company. Value added is superior performance measure because it pays attention on inputs which are under the control of the management.
2. By employing various productivity measures like value added per rupee of capital employed, value added per rupee sales, , value added per employee etc it helps in judging the productivity of the company.
3. Resource allocation decisions are normally based on the concept of maximizing profit but value added statement provides a better alternative by focusing on other factors rather than just profit.
4. It also helps in devising the incentives schemes for the employees of the company in a better way.
5. It reflects a broader view of the company’s objectives and responsibilities rather than just focusing only on the small aspects about the company.