Market Value Added (MVA)
Market value added (MVA) is the difference between a firm 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
eBay Inc., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial period from 2014 to 2018 is characterized by significant volatility in market valuation alongside a substantial structural reduction and subsequent stabilization of invested capital. Throughout the observed timeframe, the market value added remained consistently positive, indicating that the market valuation of the organization exceeded the capital invested in its operations.
- Market Value Trends
- A sharp contraction in market value occurred between 2014 and 2015, where the value decreased from US$ 64,563 million to US$ 27,359 million. A recovery phase followed, with values rising steadily to a peak of US$ 44,105 million in 2017, before declining again to US$ 34,350 million by December 31, 2018.
- Invested Capital Dynamics
- A substantial decrease in invested capital is observed between 2014 and 2015, falling from US$ 20,937 million to US$ 7,328 million. Following this initial decline, the invested capital maintained a relative equilibrium for the remainder of the period, fluctuating minimally between a low of US$ 6,903 million in 2017 and a high of US$ 7,687 million in 2016.
- Market Value Added (MVA) Analysis
- The MVA mirrored the volatility of the market value, starting at a peak of US$ 43,627 million in 2014 and dropping to US$ 20,030 million in 2015. A subsequent upward trend saw MVA reach US$ 37,202 million in 2017, followed by a reduction to US$ 26,753 million in 2018. The persistence of positive MVA throughout the five-year period suggests that the company continued to generate value above its cost of capital, despite the fluctuations in total market capitalization.
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MVA Spread Ratio
eBay Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 26,753) | 37,202) | 27,061) | 20,030) | 43,627) | |
| Invested capital2 | 7,597) | 6,903) | 7,687) | 7,328) | 20,937) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 352.15% | 538.88% | 352.03% | 273.33% | 208.37% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Amazon.com Inc. | — | — | — | — | — | |
| Home Depot Inc. | — | — | — | — | — | |
| Lowe’s Cos. Inc. | — | — | — | — | — | |
| TJX Cos. Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2018 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 26,753 ÷ 7,597 = 352.15%
4 Click competitor name to see calculations.
The financial performance from 2014 to 2018 demonstrates a period of significant volatility in market valuation and a fundamental shift in the capital structure. While the absolute market value added fluctuated, the efficiency of value creation relative to the capital employed showed a strong upward trajectory for the majority of the period before correcting in the final year.
- Market Value Added (MVA)
- A substantial decline in MVA is observed between 2014 and 2015, falling from 43,627 million USD to 20,030 million USD. This was followed by a three-year recovery phase, with values peaking at 37,202 million USD in 2017. However, this growth trend reversed in 2018, with MVA decreasing to 26,753 million USD.
- Invested Capital
- Invested capital underwent a drastic reduction between 2014 and 2015, dropping from 20,937 million USD to 7,328 million USD. Following this sharp contraction, the invested capital remained relatively stable, fluctuating within a narrow range between 6,903 million USD and 7,687 million USD from 2015 through 2018.
- MVA Spread Ratio
- Despite the fluctuations in absolute MVA, the MVA spread ratio exhibited consistent growth from 2014 to 2017. The ratio increased from 208.37% in 2014 to a peak of 538.88% in 2017, indicating that the company generated significantly more market value relative to its invested capital over time. This trend was primarily driven by the sharp reduction in invested capital in 2015, which outpaced the decline in MVA. A correction occurred in 2018, where the ratio returned to 352.15%, aligning closely with the levels observed in 2016.
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MVA Margin
eBay Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 26,753) | 37,202) | 27,061) | 20,030) | 43,627) | |
| Net revenues | 10,746) | 9,567) | 8,979) | 8,592) | 17,902) | |
| Add: Increase (decrease) in deferred revenue | 33) | 7) | 4) | (2) | 30) | |
| Adjusted net revenues | 10,779) | 9,574) | 8,983) | 8,590) | 17,932) | |
| Performance Ratio | ||||||
| MVA margin2 | 248.20% | 388.57% | 301.25% | 233.18% | 243.29% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Amazon.com Inc. | — | — | — | — | — | |
| Home Depot Inc. | — | — | — | — | — | |
| Lowe’s Cos. Inc. | — | — | — | — | — | |
| TJX Cos. Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 MVA. See details »
2 2018 Calculation
MVA margin = 100 × MVA ÷ Adjusted net revenues
= 100 × 26,753 ÷ 10,779 = 248.20%
3 Click competitor name to see calculations.
The financial metrics from 2014 to 2018 exhibit significant volatility in market value creation and a structural shift in revenue scale following the 2014 fiscal year.
- Market Value Added (MVA)
- A substantial contraction in MVA occurred between 2014 and 2015, with the value decreasing from 43,627 million to 20,030 million. A recovery trend followed, peaking at 37,202 million in 2017, before a subsequent decline to 26,753 million was recorded in 2018.
- Adjusted Net Revenues
- A sharp reduction in adjusted net revenues is observed between 2014 and 2015, falling from 17,932 million to 8,590 million. From 2015 through 2018, a steady growth pattern emerged, with revenues increasing annually to reach 10,779 million by the end of the period.
- MVA Margin
- The MVA margin showed a non-linear trend, starting at 243.29% in 2014 and experiencing a slight dip to 233.18% in 2015. A period of aggressive expansion occurred between 2016 and 2017, with the margin reaching a peak of 388.57%. This indicates a period of high market value creation relative to the revenue base. However, a sharp correction occurred in 2018, with the margin falling to 248.20%.
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