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
General Mills Inc., MVA calculation
US$ in thousands
Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).
1 Fair value of debt. See details »
2 Invested capital. See details »
The Market Value Added (MVA) exhibited significant volatility between May 2014 and May 2019, characterized by an initial growth phase, a sharp contraction, and a subsequent partial recovery. The peak of value creation was reached in May 2016, while the lowest point occurred in May 2018.
- Market Valuation Trends
- The market value demonstrated an upward trajectory from 2014 to 2016, peaking at approximately 52.88 billion USD. This was followed by a sharp correction in 2017, where the value fell to 42.95 billion USD. A gradual recovery trend was observed thereafter, with the valuation rising to 47.61 billion USD by May 2019.
- Invested Capital Analysis
- Invested capital remained relatively stable and showed a slight downward trend between 2014 and 2016, moving from 19.36 billion USD to 18.40 billion USD. A significant structural shift occurred in 2018, when invested capital surged to 27.61 billion USD, indicating a substantial increase in the capital employed by the organization. This level remained largely consistent into 2019 at 27.39 billion USD.
- Market Value Added (MVA) Dynamics
- MVA increased steadily from 23.90 billion USD in 2014 to a maximum of 34.48 billion USD in 2016, driven by the simultaneous increase in market value and the decrease in invested capital. However, a severe decline was observed between 2016 and 2018, with MVA dropping to 15.97 billion USD. This contraction was the result of a dual impact: the decrease in market capitalization in 2017 and the substantial rise in invested capital in 2018. By May 2019, MVA showed signs of recovery, rising to 20.22 billion USD.
The overall analysis indicates that the organization's ability to create value above its invested capital was most efficient in 2016. The subsequent erosion of MVA suggests that the increase in invested capital in 2018 was not immediately offset by a proportional increase in market valuation, although the trend reversed slightly by the end of the period.
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MVA Spread Ratio
General Mills Inc., MVA spread ratio calculation, comparison to benchmarks
| May 26, 2019 | May 27, 2018 | May 28, 2017 | May 29, 2016 | May 31, 2015 | May 25, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Market value added (MVA)1 | 20,220,519) | 15,973,961) | 23,965,369) | 34,482,631) | 25,775,368) | 23,900,474) | |
| Invested capital2 | 27,385,340) | 27,608,082) | 18,984,610) | 18,400,346) | 19,241,428) | 19,362,635) | |
| Performance Ratio | |||||||
| MVA spread ratio3 | 73.84% | 57.86% | 126.24% | 187.40% | 133.96% | 123.44% | |
| Benchmarks | |||||||
| MVA Spread Ratio, Competitors4 | |||||||
| Coca-Cola Co. | — | — | — | — | — | — | |
| Mondelēz International Inc. | — | — | — | — | — | — | |
| PepsiCo Inc. | — | — | — | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).
1 MVA. See details »
2 Invested capital. See details »
3 2019 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 20,220,519 ÷ 27,385,340 = 73.84%
4 Click competitor name to see calculations.
An analysis of market value added (MVA) and capital efficiency reveals a period of significant volatility between 2014 and 2019. The organization experienced a period of value expansion peaking in 2016, followed by a sharp contraction and a subsequent partial recovery by the end of the period.
- Market Value Added (MVA) Trends
- MVA exhibited an upward trajectory from 2014 to 2016, rising from $23.9 billion to a peak of $34.5 billion. Following this peak, a substantial decline occurred, with values dropping to $24.0 billion in 2017 and reaching a period low of $16.0 billion in 2018. A recovery phase began in 2019, with MVA increasing to $20.2 billion.
- Invested Capital Fluctuations
- Invested capital remained relatively stable between 2014 and 2017, fluctuating within a narrow range between $18.4 billion and $19.4 billion. A significant shift occurred in 2018, characterized by a sharp increase in invested capital to $27.6 billion, which remained largely consistent into 2019 at $27.4 billion. This suggests a major capital expansion or strategic investment during the 2018 fiscal year.
- MVA Spread Ratio Performance
- The MVA spread ratio reflects the effectiveness of capital utilization in creating market value. The ratio grew from 123.44% in 2014 to a maximum of 187.40% in 2016, indicating high value creation relative to the capital base. However, a severe contraction is observed in 2018, where the ratio fell to 57.86%. This decline was the result of a dual impact: the reduction in total MVA and the simultaneous surge in invested capital. A modest recovery to 73.84% was recorded in 2019, though it remained well below the levels seen prior to 2017.
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MVA Margin
General Mills Inc., MVA margin calculation, comparison to benchmarks
| May 26, 2019 | May 27, 2018 | May 28, 2017 | May 29, 2016 | May 31, 2015 | May 25, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Market value added (MVA)1 | 20,220,519) | 15,973,961) | 23,965,369) | 34,482,631) | 25,775,368) | 23,900,474) | |
| Net sales | 16,865,200) | 15,740,400) | 15,619,800) | 16,563,100) | 17,630,300) | 17,909,600) | |
| Performance Ratio | |||||||
| MVA margin2 | 119.89% | 101.48% | 153.43% | 208.19% | 146.20% | 133.45% | |
| Benchmarks | |||||||
| MVA Margin, Competitors3 | |||||||
| Coca-Cola Co. | — | — | — | — | — | — | |
| Mondelēz International Inc. | — | — | — | — | — | — | |
| PepsiCo Inc. | — | — | — | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).
1 MVA. See details »
2 2019 Calculation
MVA margin = 100 × MVA ÷ Net sales
= 100 × 20,220,519 ÷ 16,865,200 = 119.89%
3 Click competitor name to see calculations.
The financial performance between May 2014 and May 2019 is characterized by significant volatility in market value creation relative to revenue performance. A notable divergence is observed where market valuation peaked while net sales were in a period of decline.
- Market Value Added (MVA) Trends
- MVA experienced a period of growth from 2014 to 2016, ascending from 23,900,474 thousand USD to a peak of 34,482,631 thousand USD. This growth was followed by a sharp contraction, with the value retreating to 15,973,961 thousand USD by May 2018, representing a significant loss in market value added. A partial recovery was recorded in 2019, with MVA rising to 20,220,519 thousand USD.
- Net Sales Trajectory
- A consistent downward trend in net sales is observed from May 2014 to May 2017, with figures declining from 17,909,600 thousand USD to a low of 15,619,800 thousand USD. This decline was reversed in the final two years of the period, as net sales climbed back to 16,865,200 thousand USD by May 2019.
- MVA Margin Interpretation
- The MVA margin shows a strong correlation with the absolute MVA figures. The margin increased from 133.45% in 2014 to a peak of 208.19% in 2016; notably, this peak occurred while net sales were simultaneously decreasing, suggesting a decoupling of market valuation from top-line revenue. The margin subsequently declined to a period low of 101.48% in 2018 before rebounding to 119.89% in 2019.
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