.Market Value Added (MVA)
Difficulty: Advanced
Market value added (MVA) is the difference between a firms's fair value and its invested capital. MVA is a measure of the value a company has created in excess of the resources already committed to the enterprise.
MVA
Costco Wholesale Corp., MVA calculation
USD $ in millions
| Sep 3, 2017 | Aug 28, 2016 | Aug 30, 2015 | Aug 31, 2014 | Sep 1, 2013 | Sep 2, 2012 | ||
|---|---|---|---|---|---|---|---|
| | Fair value of Debt1 | ||||||
| | PV of operating lease payments2 | ||||||
| | Market value of common equity | ||||||
| | Preferred stock $.01 par value; no shares issued and outstanding | ||||||
| | Noncontrolling interests | ||||||
| | Less: Short-term investments | ||||||
| | Market (fair) value of Costco | ||||||
| | Less: Invested capital3 | ||||||
| | MVA |
Source: Based on data from Costco Wholesale Corp. Annual Reports
1 Fair value of debt. See Details »
2 Present value of operating lease payments. See Details »
3 Invested capital. See Details »
| Item | Description | The company |
|---|---|---|
| MVA | Costco's market (fair) value less invested capital. | Costco Wholesale Corp.'s MVA declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level. |
MVA Spread
Costco Wholesale Corp., MVA spread calculation
| Sep 3, 2017 | Aug 28, 2016 | Aug 30, 2015 | Aug 31, 2014 | Sep 1, 2013 | Sep 2, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in millions) | |||||||
| | Market value added (MVA)1 | ||||||
| | Invested capital2 | ||||||
| Ratio | |||||||
| | MVA spread3 | % | % | % | % | % | % |
Source: Based on data from Costco Wholesale Corp. Annual Reports
2017 Calculations
1 MVA. See Details »
2 Invested capital. See Details »
3 MVA spread = 100 × MVA ÷ Invested capital
= 100 × ÷ = %
| Ratio | Description | The company |
|---|---|---|
| MVA spread | The ratio of MVA to invested capital. It measures the efficiency with which investors' capital investment has translated into a franchise value and into an aggregate net present value premium. | Costco Wholesale Corp.'s MVA spread deteriorated from 2015 to 2016 but then improved from 2016 to 2017 not reaching 2015 level. |
MVA Margin
Costco Wholesale Corp., MVA margin calculation
| Sep 3, 2017 | Aug 28, 2016 | Aug 30, 2015 | Aug 31, 2014 | Sep 1, 2013 | Sep 2, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in millions) | |||||||
| | Market value added (MVA)1 | ||||||
| | Net sales | ||||||
| Ratio | |||||||
| | MVA margin2 | % | % | % | % | % | % |
Source: Based on data from Costco Wholesale Corp. Annual Reports
2017 Calculations
1 MVA. See Details »
2 MVA margin = 100 × MVA ÷ Net sales
= 100 × ÷ = %
| Ratio | Description | The company |
|---|---|---|
| MVA margin | The ratio of MVA to sales. It measures how efficiently and prodigiously sales translate into franchise value. | Costco Wholesale Corp.'s MVA margin deteriorated from 2015 to 2016 and from 2016 to 2017. |
