MVA

Market Value Added (MVA) = market value - invested capital.

Market Value Added (MVA) is the difference between the equity market valuation of a listed/quoted company and the sum of the adjusted book value of debt and equity invested in the company. In other words it is the sum of all capital claims held against the company; the market value of debt and the market value of equity. The higher the Market Value Added (MVA), the better. Negative MVA means that the value of the actions and investments of management is less than the value of the capital contributed to the company by the capital markets. This means that wealth or value has been destroyed. Note: the aim is to maximize MVA, NOT to maximize the value of the firm, since this can be easily accomplished by investing ever-increasing amounts of capital MVA does NOT take into account the opportunity costs of the invested capital. MVA also does NOT take into account intermediate cash returns to shareholders.

Market Value Added (MVA) can not be calculated at divisional (Strategic Business Unit) level and can not be used for private held companies.