Definition for : Market value added, MVA

Market value added represents the difference between the value of Equity and Net debt, and the book value of Capital employed. With Net debt often taken at its book value, the MVA becomes the difference between the Market capitalisation and the Book value of shareholders' equity. MVA is expressed in currency units. Market value added is one of the Market indicators of value creation. MVA, and particularly any change in MVA, constitutes a more relevant measure of value than just developments in Share price. MVA assesses increase in value with regard to the Capital invested.

(See Chapter 28 investment criteria of the Vernimmen)

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