Market Value Added (MVA)

MVA compares what investors have put into a company with what the company is now worth in the market. A positive MVA means the company has created value; a negative MVA means it has destroyed value.

It is typically calculated as the market value of equity and debt minus the total capital invested. For example, if investors have put 10 billion into a company over its life, and its debt and equity are now worth 15 billion, its MVA is 5 billion.

MVA is closely linked to economic profit. In theory, a company's MVA equals the present value of all the economic profit investors expect it to earn in future. Companies that consistently earn returns above their cost of capital tend to have high MVA.

MVA reflects market expectations, so it changes with share prices and can be affected by market sentiment that has little to do with management's performance. Measuring invested capital also requires adjustments to accounting figures, which can vary between analysts.