1. What is Market Value Added (MVA)?

Market Value Added (MVA) is the difference between the market value of a company and the capital contributed by investors (book value). It represents 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:

• \( Market\ Value \) — Current market capitalization of the company (USD)
• \( Book\ Value \) — Total capital invested in the company (USD)

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

3. Importance of MVA Calculation

Details: MVA is a crucial metric for assessing corporate performance and shareholder value creation. It helps investors evaluate how effectively management has deployed capital.

4. Using the Calculator

Tips: Enter the current market value and book value 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 total value created, EVA (Economic Value Added) measures periodic value creation. MVA is essentially the present value of all future EVAs.

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

Q3: How often should MVA be calculated?
A: MVA can be calculated whenever market value changes significantly, typically quarterly with financial reporting.

Q4: What factors influence MVA?
A: MVA is influenced by profitability, growth prospects, risk profile, industry conditions, and management quality.

Q5: How does MVA relate to stock price?
A: MVA per share is closely related to stock price, as it reflects the premium investors are willing to pay over invested capital.