Market value added: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Kmacharla No edit summary |
imported>Doug Williamson m (Add link.) |
||
| (4 intermediate revisions by the same user not shown) | |||
| Line 1: | Line 1: | ||
''Valuation.'' | |||
(MVA). | |||
The excess of the actual or theoretical market value of a firm over its book value. | |||
'''Example''' | |||
Using a simplified example, for an all-equity financed firm with an actual or theoretical market capitalisation of $130m and book value of equity $100m: | |||
MVA = $130m - $100m | |||
= '''$30m'''. | |||
In practice a number of adjustments would be made both to the market values and to the book values used in the calculation of the MVA. | In practice a number of adjustments would be made both to the market values and to the book values used in the calculation of the MVA. | ||
So in practice the assessment of MVA is both more complicated, and arguably more subjective, than the simple calculation illustrated above. | So in practice the assessment of MVA is both more complicated, and arguably more subjective, than the simple calculation illustrated above. | ||
== See also == | == See also == | ||
| Line 14: | Line 25: | ||
* [[Excess Return]] | * [[Excess Return]] | ||
* [[Market value]] | * [[Market value]] | ||
* [[Market/book ratio]] | |||
* [[Shareholder value]] | * [[Shareholder value]] | ||
* [[Total shareholder return]] | |||
[[Category:The_business_context]] | |||
[[Category:Corporate_finance]] | |||
[[Category:Investment]] | |||
[[Category:Long_term_funding]] | |||
[[Category:Financial_products_and_markets]] | |||
Latest revision as of 13:28, 8 April 2021
Valuation.
(MVA).
The excess of the actual or theoretical market value of a firm over its book value.
Example
Using a simplified example, for an all-equity financed firm with an actual or theoretical market capitalisation of $130m and book value of equity $100m:
MVA = $130m - $100m
= $30m.
In practice a number of adjustments would be made both to the market values and to the book values used in the calculation of the MVA.
So in practice the assessment of MVA is both more complicated, and arguably more subjective, than the simple calculation illustrated above.
