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
Kimberly-Clark Corp., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2020-12-31), 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).
1 Fair value of debt. See details »
2 Invested capital. See details »
The analysis of market value added (MVA) between 2016 and 2020 indicates a sustained ability to generate shareholder wealth significantly exceeding the invested capital. While the MVA experienced fluctuations, it remained substantially positive throughout the period, peaking in 2019.
- Market Value Trends
- The fair market value exhibited volatility, starting at US$ 52,664 million in 2016 and declining through 2018 to a low of US$ 47,528 million. A sharp recovery occurred in 2019, reaching a five-year peak of US$ 58,784 million, before moderating to US$ 55,371 million by the end of 2020.
- Invested Capital Stability
- Invested capital remained relatively stable from 2016 to 2019, oscillating within a narrow range between US$ 11,239 million and US$ 11,929 million. However, a notable increase was recorded in 2020, where invested capital rose to US$ 12,877 million, representing the highest capital commitment in the observed period.
- Market Value Added (MVA) Dynamics
- MVA tracked closely with the fluctuations in market value due to the relative stability of the invested capital base for the majority of the period. MVA decreased from US$ 40,886 million in 2016 to US$ 36,048 million in 2017, remained steady in 2018, and surged to US$ 47,379 million in 2019. By 2020, MVA declined to US$ 42,494 million, a result of the simultaneous decrease in total market value and the increase in invested capital.
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MVA Spread Ratio
Kimberly-Clark Corp., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 42,494) | 47,379) | 36,289) | 36,048) | 40,886) | |
| Invested capital2 | 12,877) | 11,405) | 11,239) | 11,929) | 11,778) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 330.00% | 415.42% | 322.89% | 302.19% | 347.14% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Procter & Gamble Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 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).
1 MVA. See details »
2 Invested capital. See details »
3 2020 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 42,494 ÷ 12,877 = 330.00%
4 Click competitor name to see calculations.
The analysis of value creation metrics from 2016 to 2020 reveals a period of volatility in market value generation relative to the capital invested in the business. While there was a significant peak in value added during 2019, the subsequent year saw a contraction in both the absolute market value added and the efficiency of capital utilization.
- Market Value Added (MVA)
- The MVA exhibited a non-linear trend over the five-year period. After an initial decline from US$ 40,886 million in 2016 to US$ 36,048 million in 2017, the value stabilized in 2018 before surging to a period high of US$ 47,379 million in 2019. This peak was followed by a correction in 2020, where the MVA decreased to US$ 42,494 million.
- Invested Capital
- Invested capital remained relatively stable between 2016 and 2019, fluctuating within a narrow range between US$ 11,239 million and US$ 11,929 million. However, a notable increase occurred in 2020, with invested capital rising to US$ 12,877 million, marking the highest capital commitment in the analyzed period.
- MVA Spread Ratio
- The MVA spread ratio closely mirrored the movements of the absolute MVA, reflecting the company's ability to generate market value above its invested capital. The ratio declined from 347.14% in 2016 to 302.19% in 2017, then recovered and peaked at 415.42% in 2019. The sharp decline to 330.00% in 2020 was driven by the dual impact of a decreasing MVA and a simultaneous increase in invested capital.
Overall, the data indicates that the most efficient period of value creation occurred in 2019. The 2020 results suggest a reduction in the spread between market value and invested capital, indicating a lower premium being attributed to the capital deployed in the business compared to the preceding year.
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MVA Margin
Kimberly-Clark Corp., MVA margin calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 42,494) | 47,379) | 36,289) | 36,048) | 40,886) | |
| Net sales | 19,140) | 18,450) | 18,486) | 18,259) | 18,202) | |
| Performance Ratio | ||||||
| MVA margin2 | 222.02% | 256.79% | 196.30% | 197.43% | 224.62% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Procter & Gamble Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 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).
1 MVA. See details »
2 2020 Calculation
MVA margin = 100 × MVA ÷ Net sales
= 100 × 42,494 ÷ 19,140 = 222.02%
3 Click competitor name to see calculations.
The analysis of market value added (MVA) and the corresponding MVA margin between 2016 and 2020 reveals a period of volatility in market valuation relative to a steady, gradual increase in net sales.
- Market Value Added (MVA) Trends
- A fluctuating trend is observed in the absolute MVA, which declined from 40,886 million US$ in 2016 to 36,048 million US$ in 2017. After remaining relatively stable in 2018 at 36,289 million US$, a significant surge occurred in 2019, where MVA peaked at 47,379 million US$. This growth was followed by a contraction in 2020, with the value settling at 42,494 million US$.
- Net Sales Performance
- Net sales exhibited a consistent long-term upward trend, rising from 18,202 million US$ in 2016 to 19,140 million US$ in 2020. Growth was marginal between 2016 and 2019, with a slight dip in 2019 to 18,450 million US$, followed by the most substantial annual increase in 2020.
- MVA Margin Analysis
- The MVA margin, which measures market value creation relative to sales, followed the volatility of the absolute MVA. The margin decreased from 224.62% in 2016 to a period low of 196.30% in 2018. A sharp expansion was recorded in 2019, reaching a maximum of 256.79%, indicating a peak in market confidence relative to revenue. The margin subsequently retracted to 222.02% in 2020, returning to levels similar to those seen at the start of the analyzed period.
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