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
Mosaic Co., MVA calculation
US$ in thousands
Based on: 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), 10-K (reporting date: 2017-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial performance of Mosaic Co. between 2017 and 2021 is characterized by significant volatility in market valuation, leading to a fluctuating Market Value Added (MVA) profile. While the invested capital remained relatively stable, the market's perception of the company's value shifted dramatically, resulting in a transition from value creation to value destruction and back to substantial value creation by the end of the period.
- Market Valuation Trends
- The market value exhibited a non-linear trajectory. After remaining stable between 2017 and 2018 at approximately 16 billion US$, a sharp contraction occurred in 2019, where the value fell to 12.38 billion US$. This was followed by a robust recovery phase, with the market value climbing to 16.68 billion US$ in 2020 and peaking at 21.75 billion US$ in 2021.
- Invested Capital Stability
- Invested capital demonstrated minimal variance over the five-year horizon. The figures fluctuated within a narrow range, starting at 15.02 billion US$ in 2017 and ending at 15.84 billion US$ in 2021. The lowest point was recorded in 2020 at 14.65 billion US$, indicating that the company's internal capital base remained consistent despite the external market volatility.
- Market Value Added (MVA) Dynamics
- The MVA reflects a volatile cycle of shareholder value. In 2017, the MVA was positive at 1.04 billion US$, which decreased to 491.58 million US$ in 2018. A critical inflection point occurred in 2019, when the MVA turned negative to -2.71 billion US$, signifying that the market value had fallen below the total capital invested in the business. However, a strong reversal followed, with MVA returning to positive territory in 2020 at 2.03 billion US$ and accelerating to a period high of 5.90 billion US$ by December 31, 2021.
- Comparative Insight
- The divergence between the stability of the invested capital and the volatility of the market value indicates that the shifts in MVA were driven primarily by market sentiment and external valuation factors rather than fundamental changes in the company's capital structure. The substantial increase in MVA by 2021 suggests a significant improvement in market confidence and an enhanced capacity for value creation relative to the capital employed.
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MVA Spread Ratio
Mosaic Co., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 5,903,779) | 2,030,872) | (2,708,821) | 491,577) | 1,037,412) | |
| Invested capital2 | 15,843,300) | 14,653,500) | 15,092,200) | 15,589,131) | 15,024,306) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 37.26% | 13.86% | -17.95% | 3.15% | 6.90% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Linde plc | 128.35% | — | — | — | — | |
| Sherwin-Williams Co. | 418.72% | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2021 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 5,903,779 ÷ 15,843,300 = 37.26%
4 Click competitor name to see calculations.
The financial performance from 2017 to 2021 is characterized by significant volatility in market value creation, followed by a period of substantial recovery and growth. While the capital base remained relatively stable, the market's perception of value fluctuated sharply, resulting in wide swings in the spread ratio.
- Market Value Added (MVA) Trends
- A period of decline occurred between 2017 and 2019, with MVA dropping from 1,037,412 thousand US$ to a negative 2,708,821 thousand US$. This negative value in 2019 indicates a period where the market value of the company fell below the total capital invested. However, a strong reversal followed, with MVA climbing to 2,030,872 thousand US$ in 2020 and reaching a peak of 5,903,779 thousand US$ by December 31, 2021.
- MVA Spread Ratio Analysis
- The spread ratio mirrored the volatility of the MVA, starting at 6.90% in 2017 and contracting to 3.15% in 2018. The ratio reached a critical low of -17.95% in 2019, signaling a significant destruction of shareholder value relative to invested capital. The subsequent recovery was aggressive, with the ratio expanding to 13.86% in 2020 and surging to 37.26% in 2021, suggesting a high rate of value creation in the final two years of the period.
- Invested Capital Consistency
- Invested capital exhibited minimal fluctuation compared to market-based metrics. The value remained within a tight range, oscillating between a low of 14,653,500 thousand US$ in 2020 and a high of 15,843,300 thousand US$ in 2021. This stability indicates that the dramatic changes observed in the MVA and spread ratio were driven by market valuation shifts rather than fundamental changes in the scale of invested capital.
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MVA Margin
Mosaic Co., MVA margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Market value added (MVA)1 | 5,903,779) | 2,030,872) | (2,708,821) | 491,577) | 1,037,412) | |
| Net sales | 12,357,400) | 8,681,700) | 8,906,300) | 9,587,300) | 7,409,400) | |
| Performance Ratio | ||||||
| MVA margin2 | 47.78% | 23.39% | -30.41% | 5.13% | 14.00% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Linde plc | 302.43% | — | — | — | — | |
| Sherwin-Williams Co. | 331.88% | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 MVA. See details »
2 2021 Calculation
MVA margin = 100 × MVA ÷ Net sales
= 100 × 5,903,779 ÷ 12,357,400 = 47.78%
3 Click competitor name to see calculations.
The analysis of Market Value Added (MVA) and the MVA margin from 2017 to 2021 reveals a period of extreme fluctuation, transitioning from a phase of value erosion to a period of significant value creation.
- Market Value Added (MVA) Trajectory
- A downward trend is observed from 2017 through 2019, with MVA falling from US$ 1,037,412 thousand to a negative US$ 2,708,821 thousand. This negative value in 2019 indicates that the market value of the company was less than the capital invested. This trend reversed sharply in 2020 and 2021, with MVA recovering to US$ 2,030,872 thousand and subsequently peaking at US$ 5,903,779 thousand.
- Net Sales Performance
- Net sales showed a general upward trajectory over the period, growing from US$ 7,409,400 thousand in 2017 to US$ 12,357,400 thousand in 2021. Despite slight fluctuations between 2018 and 2020, a significant surge in sales occurred in 2021, coinciding with the peak in MVA.
- MVA Margin Dynamics
- The MVA margin exhibits a high degree of volatility, mirroring the movements of the total MVA. The margin contracted from 14.00% in 2017 to a low of -30.41% in 2019, reflecting the destruction of market value relative to sales. A strong recovery followed, with the margin expanding to 23.39% in 2020 and reaching 47.78% in 2021, suggesting a substantial improvement in the company's ability to generate market value per dollar of sales.
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