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
Time Warner Cable Inc., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial performance from 2011 to 2015 exhibits a consistent expansion in shareholder value, characterized by a widening gap between the market valuation of the entity and the capital invested in its operations.
- Market Valuation Trends
- The market value experienced a steady upward trajectory over the five-year period, rising from 51,537 million US dollars in 2011 to 76,800 million US dollars by the end of 2015. This represents a sustained increase in the perceived fair value of the company by the equity markets.
- Invested Capital Stability
- Invested capital remained remarkably stable throughout the analysis period. Starting at 44,961 million US dollars in 2011, it fluctuated minimally, ending at 45,332 million US dollars in 2015. The absence of significant growth in invested capital indicates that the company did not require substantial new capital injections to support its market growth.
- Market Value Added (MVA) Acceleration
- Market Value Added demonstrated significant acceleration, growing from 6,576 million US dollars in 2011 to 31,468 million US dollars in 2015. Since the invested capital remained nearly constant, the growth in MVA is almost entirely driven by the increase in market value. This results in an MVA increase of approximately 378% over the period, signaling a substantial increase in the premium investors were willing to pay over the actual capital employed.
The divergence between the stagnant invested capital and the rapidly increasing MVA suggests that the company successfully enhanced its value proposition without expanding its capital base. This pattern typically indicates strong market confidence in the company's future earnings potential and the efficiency of its existing asset base in generating wealth for shareholders.
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MVA Spread Ratio
Time Warner Cable Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 31,468) | 26,311) | 21,862) | 12,045) | 6,576) | |
| Invested capital2 | 45,332) | 44,929) | 44,327) | 46,124) | 44,961) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 69.42% | 58.56% | 49.32% | 26.11% | 14.63% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2015 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 31,468 ÷ 45,332 = 69.42%
4 Click competitor name to see calculations.
A consistent and significant increase in shareholder value is evident between 2011 and 2015, characterized by a substantial rise in Market Value Added (MVA) despite a relatively stagnant base of invested capital. The synergy between these two metrics indicates an accelerating capacity to generate value above the cost of capital.
- Market Value Added (MVA) Trends
- MVA exhibited a strong upward trajectory throughout the five-year period, growing from 6,576 million US dollars in 2011 to 31,468 million US dollars by the end of 2015. The most pronounced increase occurred between 2012 and 2013, where the value nearly doubled from 12,045 million to 21,862 million US dollars, reflecting a marked improvement in market perception of the company's future profitability.
- Invested Capital Stability
- Invested capital remained remarkably stable, fluctuating within a narrow range between 44,327 million and 46,124 million US dollars. This stability suggests that the growth in market value was not driven by increased capital infusions or aggressive expansion of the asset base, but rather by increased efficiency and higher returns on existing investments.
- MVA Spread Ratio Analysis
- The MVA spread ratio demonstrated rapid and continuous expansion, rising from 14.63% in 2011 to 69.42% in 2015. This progression signifies a widening gap between the market value of the company and the capital invested in it. The consistent year-over-year increase in this ratio indicates a compounding effect in value creation, as the market increasingly rewarded the company's ability to generate returns well in excess of its cost of capital.
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MVA Margin
Time Warner Cable Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 31,468) | 26,311) | 21,862) | 12,045) | 6,576) | |
| Revenue | 23,697) | 22,812) | 22,120) | 21,386) | 19,675) | |
| Add: Increase (decrease) in deferred revenue and subscriber-related liabilities | 26) | 10) | 5) | 14) | 6) | |
| Adjusted revenue | 23,723) | 22,822) | 22,125) | 21,400) | 19,681) | |
| Performance Ratio | ||||||
| MVA margin2 | 132.65% | 115.29% | 98.81% | 56.28% | 33.41% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 MVA. See details »
2 2015 Calculation
MVA margin = 100 × MVA ÷ Adjusted revenue
= 100 × 31,468 ÷ 23,723 = 132.65%
3 Click competitor name to see calculations.
Between 2011 and 2015, there was a substantial and consistent increase in market value added and the corresponding MVA margin. The expansion of market value significantly outpaced the steady growth of adjusted revenue, indicating a strong increase in the market's valuation of the company's capital efficiency and future earning potential.
- Market Value Added (MVA) Trend
- A strong upward trajectory is observed in MVA, which rose from US$ 6,576 million in 2011 to US$ 31,468 million by 2015. This represents a total increase of approximately 378% over the five-year period, with the most pronounced growth occurring between 2012 and 2013.
- Adjusted Revenue Performance
- Adjusted revenue exhibited a steady, moderate growth pattern, increasing from US$ 19,681 million in 2011 to US$ 23,723 million in 2015. While the top-line growth remained positive and consistent, the rate of increase was significantly lower than the growth seen in the value creation metrics.
- MVA Margin Expansion
- The MVA margin experienced aggressive acceleration, climbing from 33.41% in 2011 to 132.65% in 2015. This expansion indicates that the market value created per dollar of adjusted revenue increased nearly fourfold, reflecting heightened investor confidence and a significant increase in the premium assigned to the company's operational assets.
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