can you please explain this application : using value added to measure the true size of...

can you please explain this application : using value added to measure the true size of walmart? its supposed to be an essay for me so i want to understand it or help me write an outline so i know how to go about answering this question

Expert Solution

The value added concept is a measure which is obtained by the difference of sum of the total value of the firm's sales from the value of goods and services that are purchased from other firms (all values measured in dollars). The value obtained from this is a representation of the sum of the total income of the firm which includes the wages, interest, protits as well as the rent that is generated from the organization.

Walmart's sales were obtained using the value added and the outcomes were thus compared to that of a country's overall GDP which some economists suggest that it is inappropriate to do so.

For instance, in the year 2008, Walmart accounted for nearly $374 billion in sales which roughly accounted for 26% of the total US GDP. Of the total value that Walmart projected as sales, approximately $88 billion came in by the value added. Now this value was used to compare it with the over all GDP of other nations and while doing so, it was obvious that Walmart's sales equalled Belgium's GDP when the overall sales value was considered. On the other hand when the true value of sales was considered, it equalled upto Bulgaria's GDP.

This is thus the concept of adding measure to the true size of walmart.

Rahul Sunny answered 2 years ago

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