International Business Machines Corp. (IBM)


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

International Business Machines Corp., MVA calculation

USD $ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Fair value of debt1 46,806  49,251  44,351  41,681  43,255 
PV of operating lease payments2 5,192  6,095  6,314  5,925  5,699 
Market value of common equity 124,332  144,209  169,608  127,221  162,922 
Noncontrolling interests 134  131  146  162  146 
Less: Marketable securities 618  623  716  736  326 
Market (fair) value of IBM 175,846  199,063  219,704  174,252  211,696 
Less: Invested capital3 110,894  108,645  106,417  100,468  96,198 
MVA 64,952  90,418  113,286  73,785  115,498 

Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24).

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 International Business Machines Corp.’s market (fair) value less invested capital. International Business Machines Corp.’s MVA declined from 2016 to 2017 and from 2017 to 2018.

MVA Spread

International Business Machines Corp., MVA spread calculation

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Market value added (MVA)1 64,952  90,418  113,286  73,785  115,498 
Invested capital2 110,894  108,645  106,417  100,468  96,198 
Ratio
MVA spread3 58.57% 83.22% 106.46% 73.44% 120.06%

Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24).

2018 Calculations

1 MVA. See Details »

2 Invested capital. See Details »

3 MVA spread = 100 × MVA ÷ Invested capital
= 100 × 64,952 ÷ 110,894 = 58.57%

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. International Business Machines Corp.’s MVA spread deteriorated from 2016 to 2017 and from 2017 to 2018.

MVA Margin

International Business Machines Corp., MVA margin calculation

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Market value added (MVA)1 64,952  90,418  113,286  73,785  115,498 
Revenue 79,591  79,139  79,919  81,741  92,793 
Add: Increase (decrease) in deferred income (688) 663  (157) (776) (1,097)
Adjusted revenue 78,903  79,802  79,762  80,965  91,696 
Ratio
MVA margin2 82.32% 113.30% 142.03% 91.13% 125.96%

Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24).

2018 Calculations

1 MVA. See Details »

2 MVA margin = 100 × MVA ÷ Adjusted revenue
= 100 × 64,952 ÷ 78,903 = 82.32%

Ratio Description The company
MVA margin The ratio of MVA to sales. It measures how efficiently and prodigiously sales translate into franchise value. International Business Machines Corp.’s MVA margin deteriorated from 2016 to 2017 and from 2017 to 2018.