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
CVS Health Corp., MVA calculation
USD $ in millions
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| | Fair value of Debt1 | 28,076 | 28,374 | 28,400 | 13,985 | 14,200 |
| | PV of operating lease payments2 | 16,275 | 16,201 | 16,217 | 14,980 | 14,992 |
| | Market value of common equity | 70,804 | 79,297 | 99,424 | 114,416 | 81,316 |
| | Preferred stock, par value $0.01; none issued or outstanding | – | – | – | – | – |
| | Redeemable noncontrolling interest | – | – | 39 | – | – |
| | Noncontrolling interest | 4 | 4 | 7 | 5 | – |
| | Less: Investments | 111 | 87 | 88 | 85 | 88 |
| | Market (fair) value of CVS Health | 115,048 | 123,789 | 143,999 | 143,301 | 110,419 |
| | Less: Invested capital3 | 84,329 | 85,284 | 85,571 | 69,298 | 69,625 |
| | MVA | 30,719 | 38,505 | 58,428 | 74,003 | 40,795 |
Source: Based on data from CVS Health 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 | CVS Health's market (fair) value less invested capital. | CVS Health Corp.'s MVA declined from 2015 to 2016 and from 2016 to 2017. |
MVA Spread
CVS Health Corp., MVA spread calculation
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in millions) | ||||||
| | Market value added (MVA)1 | 30,719 | 38,505 | 58,428 | 74,003 | 40,795 |
| | Invested capital2 | 84,329 | 85,284 | 85,571 | 69,298 | 69,625 |
| Ratio | ||||||
| | MVA spread3 | 36.43% | 45.15% | 68.28% | 106.79% | 58.59% |
Source: Based on data from CVS Health Corp. Annual Reports
2017 Calculations
1 MVA. See Details »
2 Invested capital. See Details »
3 MVA spread = 100 × MVA ÷ Invested capital
= 100 × 30,719 ÷ 84,329 = 36.43%
| 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. | CVS Health Corp.'s MVA spread deteriorated from 2015 to 2016 and from 2016 to 2017. |
MVA Margin
CVS Health Corp., MVA margin calculation
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in millions) | ||||||
| | Market value added (MVA)1 | 30,719 | 38,505 | 58,428 | 74,003 | 40,795 |
| | Net revenues | 184,765 | 177,526 | 153,290 | 139,367 | 126,761 |
| Ratio | ||||||
| | MVA margin2 | 16.63% | 21.69% | 38.12% | 53.10% | 32.18% |
Source: Based on data from CVS Health Corp. Annual Reports
2017 Calculations
1 MVA. See Details »
2 MVA margin = 100 × MVA ÷ Net revenues
= 100 × 30,719 ÷ 184,765 = 16.63%
| Ratio | Description | The company |
|---|---|---|
| MVA margin | The ratio of MVA to sales. It measures how efficiently and prodigiously sales translate into franchise value. | CVS Health Corp.'s MVA margin deteriorated from 2015 to 2016 and from 2016 to 2017. |