Market Value Added (MVA)

Market value added represents the difference between the value of equity and net debt, and the book value of capital employed. With net debt often taken at its book value, the MVA becomes the difference between the market capitalisation and the book value of shareholders’ equity.

MVA is expressed in currency units. Market value added is one of the market indicators of value creation. MVA, and particularly any change in MVA, constitutes a more relevant measure of value than just developments in share price. MVA assesses increase in value with regard to the capital invested.

Forecasting Economic Value Added (EVA) creates the concept of Market Value Added which is defined as the present value of future EVA’s.

Allan Rodrigues of The Business farm specialises in EVA and MVA based plans, valuations and reward remuneration systems. If you do have any questions please feel free to contact him on allan.rodrigues@thebusinessfarm.com.au