What is the Market Value Added? What does it represent and how do you compute it?
2006-11-19 13:47:51 · 1 answers · asked by Ferts 3 in Business & Finance ➔ Investing
Market Value Added (MVA) is a calculation that shows the difference between the market value of a company and the capital contributed by investors (both bondholders and shareholders). In other words, it is the sum of all capital claims held against the company plus the market value of debt and equity.
Calculated as: MVA=Company's Market Value - Invested Capital
The higher the MVA, the better. A high MVA indicates the company has created substantial wealth for the shareholders. A negative MVA means that the value of management's actions and investments are less than the value of the capital contributed to the company by the capital market (or that wealth and value have been destroyed).
2006-11-19 14:45:39 · answer #1 · answered by MadMoney 2 · 0⤊ 0⤋