Last updated: Jul 12, 2024

MVA Calculator

Q: Can market value added (MVA) be negative?

Yes , the market value added can be negative. A negative MVA means the asset has dropped in value since you invested in it.

Q: How can I calculate the MVA of a company?

You can calculate MVA in three steps: Compute the current market value of the company . Determine the capital invested . Apply the MVA formula: MVA = current market value - capital invested .

Q: What is the MVA if the current market value is $200 and the capital invested $150?

The MVA will be $50 . You can calculate this by subtracting the capital invested from the current market value .

Created by Wei Bin Loo

Wei Bin Loo

A strategy consultant graduated from Imperial College London with abundant experience advising companies on analytics strategy and transformation projects. Having passed his CFA Level 2 with his results ranked above the 90th percentile, he possesses a broad expertise in the finance and investment space. He is also passionate about product management and is currently a Certified Scrum Product Owner (CSPO). He is a Harry Potter fanatic and a chess and basketball enthusiast. See full profile

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Tibor Pál

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Tibor is pursuing a Ph.D. in Statistical Methods in Economics at the University of Salerno. His main research activity is developing econometric models applied in macroeconomics with a primary focus on the interrelationship between finance and the real economy. His professional experience includes working as a general ledger (GL) accountant and a financial analyst. At Omni, he translates financial queries and regulations into calculators through JS coding with clear and user-friendly content. He spends the academic year in Italy but is keen to travel to Hungary, Poland, and Malaysia in his free time. Interested in gastronomy and vinery, he is able to feed the whole team with pörkölt - a delicious dish from his homeland. See full profile

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Adena Benn is an Information Technology teacher with a degree in Computer Science. She has been teaching high schoolers since 1996 and loves everything computers. She loves problem-solving, so creating calculators to solve real-world problems is her idea of fun. She writes children's stories, is a seamstress, and is an avid reader. In her spare time, she travels and enjoys nature. See full profile

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Table of contents

What is market value added (MVA)?How to calculate MVA in finance FAQs

With this MVA calculator, you will be able to calculate the value a company is creating for its shareholders.

We have written this article to help you understand what MVA is and how to calculate MVA in finance using the market value added formula. We will also demonstrate some examples to help you understand the calculation. Please check out our economic value added calculator for further information.

What is market value added (MVA)?

Market value added (MVA) is a financial metric that calculates the difference between the total market value of a company and the amount of capital that has been invested in the company over time. The concept of MVA is based on the idea that the ultimate goal of any company is to create value for its shareholders, and that value can be measured by the market value of the company's stock.

MVA is a powerful tool for investors, managers, and analysts who want to evaluate a company's performance and its ability to create value for shareholders. A positive MVA indicates that a company is creating value for its shareholders, while a negative MVA indicates that the company is destroying value.

How to calculate MVA in finance

To understand how to calculate MVA in finance, let's take Company Alpha as an example:

Company name: Company Alpha
Current market value: $1,000,000
Capital invested: $700,000
Current stock price: $20
Number of shares outstanding: 50,000

Calculating MVA requires three steps:

Compute the current market value of the company

First, you need to calculate the company's market value, which is the total value of the company's outstanding shares. This can be calculated by multiplying the current stock price by the number of outstanding shares.

You can check out our market capitalization calculator to understand more about this topic.

Company Alpha's current market value is $20 × 50,000 = $1,000,000.
Determine the capital invested

The second step is to calculate the total capital invested in the company over time. This includes the initial capital investment plus any additional investments made by shareholders.

The capital invested in this company is $700,000.

You can also use our ROIC calculator to understand more about this topic.
Calculate the MVA

The last step is to calculate the market value added (MVA) using the market value added formula:

MVA = current market value - capital invested

Hence, the MVA of Company Alpha is $1,000,000 - $700,000 = $300,000.

FAQs

Can market value added (MVA) be negative?

Yes, the market value added can be negative. A negative MVA means the asset has dropped in value since you invested in it.

How can I calculate the MVA of a company?

You can calculate MVA in three steps:

Compute the current market value of the company.
Determine the capital invested.
Apply the MVA formula:

MVA = current market value - capital invested.

What are market value added and economic value added?

Market value added and economic value added are both measures of a company's ability to create shareholder value. MVA measures the difference between the company's market value and the capital invested, while EVA considers the cost of capital and measures residual income.

What is the significance of a negative MVA for a company?

A negative MVA indicates that the company is destroying value for its shareholders, meaning that the market value of the company is lower than the total amount of capital invested in the company.

What is the MVA if the current market value is $200 and the capital invested $150?

The MVA will be $50. You can calculate this by subtracting the capital invested from the current market value.