Enter the total market value of a business and the total amount of capital invested to determine the market value added (MVA).
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The following formula is used to calculate the market value added (MVA) of a business or firm:
MVA = TMV – CI
- Where MVA is the market value added ($)
- TMV is the total/current market value of the business ($)
- CI is the total amount of capital invested into the company over time ($)
What is MVA?
MVA, short for market value added, is defined as the difference between the current total market value (cap) and the total amount of money invested into the business.
In other words, how much of the current market value it created on its own products or services and not any market value associated with investments.
how to calculate MVA?
First, determine the current market value of the company. This is typically done by multiplying the current number of shares in the market by their value. For this example, the total market value is currently $5 billion (5,000,000,000.00)
Next, determine the total amount of money that has been invested into the company up to this point. The total funding this business has received in its lifetime is $1.5 billion ($1,500,000,000.00)
Finally, calculate the market value added using the formula above:
MVA = TMV – CI
MVA = $5,000,000,000.00 – $1,500,000,000.00
MVA = $3,500,000,000.00