MVA Calculator

What is Market Value Added?

Market Value Added (MVA) is a financial metric that calculates the difference between a company's total market value and the amount of capital invested in the company over time. It measures the value a company has created for its shareholders beyond the capital they have contributed.

A positive MVA indicates that the company is creating value for its shareholders, while a negative MVA suggests that the company is destroying value. MVA is widely used by investors, managers, and analysts to evaluate a company's performance and its ability to generate shareholder wealth.

MVA Formula

The formula for calculating Market Value Added is straightforward:

MVA = Current Market Value − Capital Invested

The current market value is the total value of a company's outstanding shares, calculated by multiplying the current stock price by the number of shares outstanding. The capital invested includes the initial equity investment plus any additional capital contributions made by shareholders over time.

How to Use the MVA Calculator

The MVA calculator provides two input modes:

• Direct Mode: Enter the company's current market value and capital invested directly to compute MVA.
• Share Price Mode: Enter the current share price and number of shares outstanding to compute market value, then enter capital invested to calculate MVA.

For example, if a company has a current market value of $1,000,000 and capital invested of $700,000, the MVA would be $300,000, indicating the company has created $300,000 of value for its shareholders.

MVA vs. Economic Value Added (EVA)

While MVA measures the total value created for shareholders since the company's inception, Economic Value Added (EVA) measures the residual income generated in a specific period after accounting for the cost of capital. MVA is a cumulative metric, while EVA is period-specific. Both are valuable tools for assessing a company's ability to create shareholder value.