Market value added: Difference between revisions
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(MVA). The excess of the actual or theoretical market value of a firm over its book value. | (MVA). | ||
The excess of the actual or theoretical market value of a firm over its book value. | |||
Taking a simplified example, for an all-equity financed firm with an actual or theoretical market capitalisation of $130m and book value of equity $100m: | Taking 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. | 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 == | ||
Revision as of 09:00, 13 August 2013
(MVA).
The excess of the actual or theoretical market value of a firm over its book value.
Taking 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.
