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
Monsanto Co., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The analysis of Market Value Added (MVA) from 2012 to 2017 reveals a period of significant volatility characterized by an initial growth phase, a sharp contraction in 2015, and a subsequent recovery. Throughout the observed period, the market value of the organization consistently and substantially exceeded the invested capital, indicating a strong capacity for value creation beyond the cost of capital.
- Market Value Trends
- The fair market value exhibited a general upward trajectory between 2012 and 2014, rising from 50,045 million USD to a peak of 62,932 million USD. A notable correction occurred in 2015, where the value declined to 50,387 million USD. However, a recovery followed in 2016 and 2017, with the market value returning to 62,433 million USD by the end of the period.
- Invested Capital Dynamics
- Invested capital showed a steady increase from 14,553 million USD in 2012 to a peak of 18,327 million USD in 2015. This peak in capital investment coincided with the lowest point of market value during the period. By 2016, invested capital decreased to 15,963 million USD and remained relatively stable at 16,366 million USD in 2017.
- Market Value Added (MVA) Performance
- MVA grew steadily from 35,492 million USD in 2012 to a high of 46,672 million USD in 2014. A significant contraction is observed in 2015, where MVA dropped to 32,060 million USD, representing a decrease of approximately 31% from the previous year's peak. This decline was driven by the simultaneous occurrence of decreasing market valuation and increasing invested capital. A strong rebound followed, with MVA increasing to 38,751 million USD in 2016 and returning to 46,067 million USD by 2017, nearly reaching the 2014 peak.
The correlation between invested capital and market value suggests that the 2015 downturn was a critical inflection point. The subsequent recovery in MVA by 2017 indicates a restoration of market confidence and an improvement in the efficiency of capital utilization relative to market perception.
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MVA Spread Ratio
Monsanto Co., MVA spread ratio calculation, comparison to benchmarks
| Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | Aug 31, 2013 | Aug 31, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Market value added (MVA)1 | 46,067) | 38,751) | 32,060) | 46,672) | 43,431) | 35,492) | |
| Invested capital2 | 16,366) | 15,963) | 18,327) | 16,260) | 15,770) | 14,553) | |
| Performance Ratio | |||||||
| MVA spread ratio3 | 281.47% | 242.75% | 174.93% | 287.04% | 275.40% | 243.87% | |
| Benchmarks | |||||||
| MVA Spread Ratio, Competitors4 | |||||||
| lululemon athletica inc. | — | — | — | — | — | — | |
| Nike Inc. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).
1 MVA. See details »
2 Invested capital. See details »
3 2017 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 46,067 ÷ 16,366 = 281.47%
4 Click competitor name to see calculations.
The financial trajectory from 2012 to 2017 is characterized by significant value creation, though this growth was interrupted by a notable contraction in 2015. The relationship between invested capital and market value added indicates a period of volatility where capital deployment and market perception were not always aligned.
- Market Value Added (MVA) Trends
- Market value added exhibited a steady upward trend in the initial years, increasing from 35,492 million USD in 2012 to a peak of 46,672 million USD in 2014. This growth was followed by a sharp decline in 2015, where the value dropped to 32,060 million USD. A subsequent recovery occurred over the final two years, with the MVA returning to 46,067 million USD by 2017, effectively recovering the losses incurred during the 2015 downturn.
- Invested Capital Analysis
- Invested capital rose consistently from 14,553 million USD in 2012, reaching its highest point of 18,327 million USD in 2015. Notably, the peak in invested capital coincided with the lowest recorded MVA and the lowest spread ratio. Following this peak, there was a reduction in invested capital to 15,963 million USD in 2016, stabilizing at 16,366 million USD by 2017.
- MVA Spread Ratio Performance
- The MVA spread ratio, which measures the efficiency of value creation relative to invested capital, peaked at 287.04% in 2014. A substantial contraction to 174.93% was observed in 2015, indicating a period where the market valuation grew significantly slower than the invested capital base. The ratio then rebounded strongly, reaching 242.75% in 2016 and finishing at 281.47% in 2017, signaling a restoration of market confidence and value-generation efficiency.
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MVA Margin
Monsanto Co., MVA margin calculation, comparison to benchmarks
| Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | Aug 31, 2013 | Aug 31, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Market value added (MVA)1 | 46,067) | 38,751) | 32,060) | 46,672) | 43,431) | 35,492) | |
| Net sales | 14,640) | 13,502) | 15,001) | 15,855) | 14,861) | 13,504) | |
| Add: Increase (decrease) in deferred revenues | 238) | 186) | (68) | (170) | 14) | (69) | |
| Adjusted net sales | 14,878) | 13,688) | 14,933) | 15,685) | 14,875) | 13,435) | |
| Performance Ratio | |||||||
| MVA margin2 | 309.63% | 283.10% | 214.69% | 297.56% | 291.97% | 264.17% | |
| Benchmarks | |||||||
| MVA Margin, Competitors3 | |||||||
| lululemon athletica inc. | — | — | — | — | — | — | |
| Nike Inc. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).
1 MVA. See details »
2 2017 Calculation
MVA margin = 100 × MVA ÷ Adjusted net sales
= 100 × 46,067 ÷ 14,878 = 309.63%
3 Click competitor name to see calculations.
The financial trajectory between 2012 and 2017 reveals a volatile but generally positive trend in market value creation relative to sales performance. While adjusted net sales remained relatively stagnant with minor fluctuations, the market value added and its corresponding margin experienced significant swings, particularly a notable contraction in 2015 followed by a strong recovery.
- Market Value Added (MVA)
- An upward trend is observed from 2012 to 2014, with MVA increasing from 35,492 million US$ to a peak of 46,672 million US$. A sharp decline occurred in 2015, where the value dropped to 32,060 million US$, representing the lowest point in the analyzed period. However, a subsequent recovery trend is evident, with the value climbing back to 46,067 million US$ by August 31, 2017.
- Adjusted Net Sales
- Revenue patterns exhibit relative stability without a consistent growth trajectory. Sales peaked in 2014 at 15,685 million US$ and reached a low in 2016 at 13,688 million US$. The variance in sales is less pronounced than the variance in MVA, suggesting that fluctuations in market valuation were not primarily driven by changes in top-line revenue.
- MVA Margin
- The MVA margin demonstrates a high degree of correlation with the total MVA. The margin expanded from 264.17% in 2012 to 297.56% in 2014. Similar to the MVA, the margin contracted significantly in 2015 to 214.69%. The period concluded with a strong expansion, reaching a peak of 309.63% in 2017, indicating that the market's valuation of the entity increased at a rate far exceeding the growth in adjusted net sales.
The divergence between the stability of adjusted net sales and the volatility of the MVA margin suggests that external market perceptions, investor sentiment, or strategic expectations played a more dominant role in value creation than immediate sales volume. The recovery observed between 2015 and 2017 indicates a restoration of market confidence, as the MVA margin reached its highest level in the six-year period despite sales remaining below 2014 levels.
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