The time value of money, simply put, refers to the appreciation of the value of funds that naturally increases over time through investment and reinvestment. This growth is not due to the production or manufacturing process, but from the circulation and use of funds in social and economic activities. It represents the social average expected rate of return on funds under ideal conditions of no risk and no inflation.

In quantitative measurement, the time value of money is defined as the social average capital profit rate under risk-free and zero-inflation conditions. This ratio is called the time value rate. It does not include the impact of risk reward and inflation factors because it focuses on pure value added over time. The time value of money is the increase in value produced by the actual use of funds, which is equal to the initial amount of funds multiplied by the time value rate.

In terms of expression, the time value of money has two types: relative numbers and absolute numbers. The relative form is the time value rate, which represents an abstract profit rate; while the absolute form is the actual value-added, that is, the value-added of funds over time.

To deeply understand the time value of money, you can refer to relevant information, such as the detailed explanation provided by Baidu Encyclopedia. It plays a vital role in financial decision-making and investment analysis, as understanding this concept helps assess the true value of an asset and return on investment.