1. What is MVA?

Market Value Added (MVA) is the difference between the current market value of a company and the capital contributed by investors. It measures the value a company has created in excess of the resources already committed to the enterprise.

2. How Does the Calculator Work?

The calculator uses the MVA formula:

Where:

• \( Market\ Cap \) — Current market capitalization of the company
• \( Invested\ Capital \) — Total capital invested in the company

Explanation: A positive MVA indicates the company has created value for shareholders, while a negative MVA suggests it has destroyed value.

3. Importance of MVA Calculation

Details: MVA is an important metric for investors to assess how effectively a company's management has used its capital to create shareholder value. It's often used alongside other financial metrics like EVA (Economic Value Added).

4. Using the Calculator

Tips: Enter the company's current market capitalization and total invested capital in USD. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between MVA and EVA?
A: While MVA measures the total value created, EVA (Economic Value Added) measures the value created in a specific period. EVA is more of a periodic performance measure.

Q2: Can MVA be negative?
A: Yes, a negative MVA means the market values the company at less than the capital invested in it, indicating value destruction.

Q3: How often should MVA be calculated?
A: Since market cap fluctuates daily, MVA can be calculated as frequently as needed, though most companies track it quarterly or annually.

Q4: What factors affect MVA?
A: MVA is affected by both company performance (which influences market cap) and the amount of capital invested in the business.

Q5: Is higher MVA always better?
A: Generally yes, but it should be considered relative to the size of the company and compared to industry peers for proper context.