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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- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2006
- Price to Operating Profit (P/OP) since 2006
- Analysis of Revenues
- Analysis of Debt
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MVA
Mastercard Inc., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial data reveals multiple trends regarding the market value and invested capital over the five-year period ending in 2022. The market (fair) value of the entity exhibited an overall upward trend from 2018 through 2021, increasing from approximately $231.7 billion to $376.5 billion, representing substantial growth in market valuation. However, in 2022, there was a slight decline to approximately $365.4 billion, indicating a moderate decrease in market value compared to the previous year.
The invested capital showed a consistent increase from 2018 to 2021, rising from roughly $11.2 billion to $22.4 billion, which more than doubled in that timeframe. In 2022, invested capital decreased marginally to about $21.5 billion, representing a minor contraction after several years of growth.
The market value added (MVA), which reflects the difference between market value and invested capital, followed a pattern similar to the market value. It increased significantly from $220.5 billion in 2018 to $354.1 billion in 2021, indicating a growing value creation above the invested capital base. In 2022, the MVA slightly declined to $343.9 billion, consistent with the observed decrease in market value, suggesting a reduction in accrued market premium relative to the invested capital.
- Market (fair) value
- Strong growth from 2018 to 2021, peaking in 2021, followed by a mild decline in 2022.
- Invested capital
- Steady increase through 2021, more than doubling from 2018, with a slight decrease in 2022.
- Market value added (MVA)
- Robust growth aligned with market value growth, peaking in 2021; minor decline in 2022 mirrors market value trends.
In summary, the data depicts a period of significant expansion in market valuation and invested capital until 2021, after which both indicators slightly contracted in 2022. This suggests a potential stabilization or mild correction phase following several years of growth. The persistence of a large positive MVA indicates continued market confidence and value creation relative to invested capital despite the recent decline.
MVA Spread Ratio
Mastercard Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| MVA spread ratio3 | ||||||
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2022 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Market Value Added (MVA)
- The market value added exhibited a significant increase from 2018 to 2019, rising from 220,491 million US dollars to 336,913 million US dollars. However, from 2019 onward, the MVA fluctuated slightly, with a small decrease in 2020 to 333,701 million US dollars, followed by an increase in 2021 to 354,148 million US dollars, and then a slight decline again in 2022 to 343,864 million US dollars. Overall, the trend suggests growth with some volatility in the latter years.
- Invested Capital
- The invested capital increased consistently over the five-year period, starting at 11,243 million US dollars in 2018 and reaching 21,548 million US dollars by 2022. There was a steady upward trajectory each year, with the most notable growth occurring between 2019 and 2020, where the invested capital rose by approximately 3,182 million US dollars.
- MVA Spread Ratio
- The MVA spread ratio demonstrated high volatility throughout the period. It showed a sharp increase from 1,961.07% in 2018 to a peak of 2,296.3% in 2019, indicating a marked improvement in value creation relative to invested capital. Subsequently, there was a pronounced decline to 1,680.77% in 2020, followed by a continued decrease to 1,583.49% in 2021. In 2022, the ratio stabilized slightly, registering 1,595.8%. This trend reflects a diminishing return on invested capital after the high in 2019, approaching a more moderate but stable spread in recent years.
- Overall Insights
- The financial data indicates that while the company significantly increased its invested capital over the given period, the growth in market value added has experienced fluctuations. The MVA spread ratio's pattern suggests that the efficiency of capital utilization in creating market value peaked in 2019 and has since moderated. This could imply changing market conditions or shifts in operational performance affecting value creation relative to the capital invested.
MVA Margin
Mastercard Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Net revenue | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted net revenue | ||||||
| Performance Ratio | ||||||
| MVA margin2 | ||||||
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 MVA. See details »
2 2022 Calculation
MVA margin = 100 × MVA ÷ Adjusted net revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
- Market Value Added (MVA)
- The market value added experienced significant growth from 2018 to 2019, increasing from 220,491 million US dollars to 336,913 million US dollars. This level was generally maintained with a slight decrease in 2020 to 333,701 million US dollars, followed by a further increase in 2021 to 354,148 million US dollars. However, in 2022, a reduction occurred, bringing the MVA down to 343,864 million US dollars. This reflects an overall upward trend over the five-year period with some fluctuations, particularly a decline in the most recent year observed.
- Adjusted Net Revenue
- The adjusted net revenue demonstrates a positive growth trajectory throughout the entire timeframe. Starting at 15,022 million US dollars in 2018, the revenue increased steadily each year, reaching 22,257 million US dollars by the end of 2022. Notably, there was a dip in 2020 where net revenue decreased to 15,455 million US dollars compared to 16,908 million US dollars in 2019, which may suggest an impact of external factors. The recovery and subsequent increases in 2021 and 2022 indicate strong revenue growth momentum.
- MVA Margin
- The MVA margin percentage saw a peak in 2020 at 2,159.18%, after rising steadily from 1,467.79% in 2018 and 1,992.62% in 2019. Subsequently, it experienced a decline over the next two years, falling to 1,859.24% in 2021 and further to 1,544.97% in 2022. This suggests that while the company's market value was increasing at a high rate relative to its net revenue initially, the efficiency or return on market value added decreased in the latter period, indicating potential challenges in maintaining market valuations aligned with revenue growth.