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.
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DuPont de Nemours Inc. pages available for free this week:
- Statement of Comprehensive Income
- Common-Size Income Statement
- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Net Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
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MVA
DuPont de Nemours Inc., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2019-12-31), 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).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial data reveals notable fluctuations in the market value, invested capital, and market value added for the observed period. The market (fair) value of the company experienced an initial growth from 40,570 million USD in 2015 to a peak of 94,820 million USD in 2017. Following that peak, there was a decline, with the market value reducing to 83,166 million USD in 2018 and further down to 59,435 million USD in 2019.
Invested capital shows a similar overall trend. It increased steadily from 46,288 million USD in 2015 to 50,610 million USD in 2016, followed by a substantial rise to 149,192 million USD in 2017 and a marginal increase to 153,164 million USD in 2018. However, in 2019, invested capital dropped significantly to 62,770 million USD.
The market value added (MVA), which measures the difference between market value and invested capital, was consistently negative throughout the period. The negative MVA indicates that the market value was less than the invested capital in every year observed. The MVA moved from -5,718 million USD in 2015 to a milder negative value of -1,910 million USD in 2016 but then plunged dramatically to -54,372 million USD in 2017 and further to -69,998 million USD in 2018. In 2019, the negative MVA decreased to -3,335 million USD, indicating a relative improvement but still reflecting a substantial disparity between market value and invested capital.
Overall, the data reveals sharp volatility in both market value and invested capital, peaking in 2017 and 2018, followed by a marked contraction in 2019. The persistent negative market value added throughout the period points to challenges in creating market value in excess of the capital invested.
- Market (fair) value of DuPont
- Grew sharply to 2017, then declined steadily through 2019.
- Invested capital
- Strong increase until 2018, followed by a steep decline in 2019.
- Market value added (MVA)
- Consistently negative, with extreme negative values in 2017-2018; reduced negativity in 2019.
MVA Spread Ratio
DuPont de Nemours Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| MVA spread ratio3 | ||||||
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 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).
1 MVA. See details »
2 Invested capital. See details »
3 2019 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The data presents key financial indicators over a five-year period, from 2015 to 2019, related to the company's market value added (MVA), invested capital, and MVA spread ratio. Observing the trends provides insight into the company's value creation and capital efficiency.
- Market Value Added (MVA)
- The MVA shows a consistently negative value throughout the entire period, indicating that the market value of the company was below the invested capital, implying value destruction. The negative MVA increased significantly in magnitude from -5,718 million US dollars in 2015 to an extremely pronounced -69,998 million US dollars in 2018, before improving to -3,335 million US dollars in 2019. This suggests severe challenges in generating shareholder value up until 2018, followed by a notable recovery in 2019 though still remaining negative.
- Invested Capital
- Invested capital exhibits a sharp increase in 2017 and 2018, rising from 50,610 million US dollars in 2016 to 149,192 million in 2017 and further to 153,164 million in 2018. This considerable increase indicates substantial capital deployment or acquisition activity during this period. Thereafter, invested capital declines sharply in 2019 to 62,770 million US dollars, suggesting capital divestitures or restructuring efforts.
- MVA Spread Ratio
- The MVA spread ratio, which reflects the percentage return spread between the company's invested capital and its market value, remains negative in all years. Similar to MVA, the ratio worsened significantly, deteriorating from -12.35% in 2015 to -45.7% in 2018, indicating increasing inefficiency in capital utilization and diminishing returns for investors. In 2019, the ratio improves substantially to -5.31%, indicating a recovery in relative performance but still reflecting value destruction.
Overall, the company faced considerable difficulties in creating market value from 2015 through 2018, marked by escalating negative MVA values and widening negative spread ratios alongside a massive surge in invested capital. The subsequent decline in invested capital and improvement in MVA and its spread in 2019 suggest corrective actions or changes in business operations, resulting in partial recovery though the company remained below break-even in value creation metrics.
MVA Margin
DuPont de Nemours Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted net sales | ||||||
| Performance Ratio | ||||||
| MVA margin2 | ||||||
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 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).
1 MVA. See details »
2 2019 Calculation
MVA margin = 100 × MVA ÷ Adjusted net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Market Value Added (MVA)
- The MVA shows significant fluctuations over the five-year period. It starts at a negative value of -5,718 million USD in 2015, improves somewhat in 2016 to -1,910 million USD, but then sharply declines in 2017 and 2018 reaching very large negative values of -54,372 million USD and -69,998 million USD respectively. By 2019, the MVA improves notably, rising to -3,335 million USD, though it remains negative. This indicates considerable volatility and substantial value erosion during 2017 and 2018, followed by partial recovery in 2019.
- Adjusted Net Sales
- The adjusted net sales exhibit an overall upward trend from 2015 to 2018, increasing from 48,778 million USD in 2015 to a peak of 85,936 million USD in 2018. However, in 2019, there is a sharp and significant decline to 21,512 million USD. This drop represents a major contraction in sales after four consecutive years of growth, suggesting a notable change in business operations or market conditions in 2019.
- MVA Margin
- The MVA margin percentage follows a similar pattern to the MVA levels, starting at -11.72% in 2015 and improving to -3.97% in 2016. In 2017 and 2018, it plunges to -83.89% and -81.45% respectively, reflecting a stark decrease in value creation relative to sales. This extreme negative margin aligns with the significant negative MVA recorded in those years. In 2019, the margin improves again to -15.51%, indicating a recovery in relative value generation, although it remains negative.
- Summary of Trends
- The data reveals a period of escalating negative value added from 2017 to 2018, despite rising sales levels until 2018. The large negative MVA and MVA margins during these years suggest challenges in profitability or capital efficiency. A notable reversal occurs in 2019 with a sharp decrease in sales accompanied by an improved MVA and MVA margin, though both indicators remain negative. The overall pattern indicates volatility in value creation and sales performance, with significant operational or strategic shifts likely influencing the 2019 results.