Calculate market value added as the difference between market value and book value of capital.
Market Data & Capital
Compare market valuation to invested capital
Formula: MVA
MVA = Market Value of Firm - Capital Invested
Market Value = (Share Price × Shares) + Market Debt
Capital Invested = Book Equity + Book Debt
MVA represents the difference between what investors have put into the company and what they can take out today. It is essentially the cumulative sum of all past and expected future Economic Value calculations.
If EVA is the internal measure of performance, MVA is the external scorecard. It tells you exactly how much wealth management has created—or destroyed—since the company was founded.
Market Value Added (MVA) is simply the difference between what a company is worth today (Market Value) and the actual capital investors put into it (Book Value).
Imagine you give a money manager $100. Five years later:
If the account is worth $150, the MVA is +$50 (Wealth Created).
If the account is worth $80, the MVA is -$20 (Wealth Destroyed).
The Formula Breakdown
MVA = V - K
Where V = Market Value of Equity + Debt, and K = Book Value of Equity + Debt (Capital Invested).
Typically, the Market Value of Debt is assumed to be equal to its Book Value (unless the company is in distress). Therefore, MVA is often simplified to: MVA ≈ Market Cap - Shareholder Equity.
Interpreting the Results
Positive MVA
The market expects the company to generate returns greater than its cost of capital in the future. It has valuable intangibles (Brand, R&D).
Negative MVA
The market believes the company's assets are worth less than their cost. Restructuring or liquidation might be necessary.
MVA vs. EVA Difference
Economic Value Added (EVA) measures performance over a single year. Market Value Added (MVA) represents the present value of all expected future EVAs.
If a company has negative EVA today but a positive MVA, it means investors believe the negative performance is temporary (e.g., a startup investing heavily for future growth).
Frequently Asked Questions
Common questions about MVA
Is high MVA always good?
Generally yes, but extremely high MVA (bubbles) can signal overvaluation. If investors expect impossible growth, the MVA gap will eventually close when reality hits.
Does MVA account for dividends?
MVA is a snapshot of current value. Dividends paid out reduce the Book Value (Retained Earnings) and usually reduce Market Cap, but the ratio/MVA remains a measure of remaining capital efficiency.
Can I calculate MVA for private companies?
No, because there is no daily share price. You would need to use a valuation model (DCF) to estimate "Market Value" first.
How does inflation affect MVA?
Book value is historical and not adjusted for inflation. In high inflation periods, MVA may appear artificially high because assets are recorded at old, low costs while market price reflects current dollars.
What is the "Market-to-Book" ratio?
It is essentially the relative version of MVA. MVA is dollar terms; Market-to-Book is a ratio. Ratio = 2.0 implies MVA is equal to Invested Capital.
Why ignore cash in MVA?
Some analysts calculate "Enterprise MVA" by netting out excess cash, as cash inherently has 0 MVA (Market Value of Cash = Book Value of Cash).
Does MVA apply to banks?
Yes, it is very common for banks. Banks trading below book value (MVA < 0) are often seen as having poor loan quality or low ROE.
Who are top MVA performers?
Tech giants (Apple, Microsoft) typically have the highest MVA because their primary assets (software, brand) are not on the balance sheet (Low K, High V).
Does buyback affect MVA?
Share buybacks reduce both Book Capital and Market Cap. If shares are bought below intrinsic value, it increases MVA for remaining shareholders.
Is MVA the same as Goodwill?
No. Goodwill is an accounting entry when one firm buys another. MVA is the market's real-time assessment of "Goodwill" for the entire firm, internally generated or acquired.
Summary
The MVA Calculator quantifies the accumulated wealth generated for investors.
It compares the market's assessment of future cash flows against the capital committed.
Use it to judge long-term management performance and corporate strategy success.
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Calculate market value added as the difference between market value and book value of capital.
How to use Market Value Added (MVA) Calculator
Step-by-step guide to using the Market Value Added (MVA) Calculator:
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Frequently asked questions
How do I use the Market Value Added (MVA) Calculator?
Simply enter your values in the input fields and the calculator will automatically compute the results. The Market Value Added (MVA) Calculator is designed to be user-friendly and provide instant calculations.
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Yes, the Market Value Added (MVA) Calculator is fully responsive and works perfectly on mobile phones, tablets, and desktop computers.
Are the results from Market Value Added (MVA) Calculator accurate?
Yes, our calculators use standard formulas and are regularly tested for accuracy. However, results should be used for informational purposes and not as a substitute for professional advice.