Luddite and Market value added: Difference between pages
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(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. | |||
== See also == | == See also == | ||
* [[ | * [[Book value]] | ||
* [[ | * [[Economic value added]] | ||
* [[Excess Return]] | |||
* [[Market value]] | |||
* [[Shareholder value]] |
Revision as of 16:31, 16 March 2015
(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.