Market value added: Difference between revisions
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imported>Doug Williamson (Link with Market/book ratio page.) |
imported>Doug Williamson (Classify page.) |
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MVA = $130m - $100m | MVA = $130m - $100m | ||
= $30m. | = '''$30m'''. | ||
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* [[Market/book ratio]] | * [[Market/book ratio]] | ||
* [[Shareholder value]] | * [[Shareholder value]] | ||
[[Category:The_business_context]] | |||
[[Category:Corporate_finance]] | |||
[[Category:Investment]] | |||
[[Category:Long_term_funding]] | |||
[[Category:Financial_products_and_markets]] | |||
Revision as of 17:02, 24 December 2019
(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.
