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 Inc., MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
An analysis of the financial performance from 2013 to 2017 reveals that the company consistently generated a positive market value added (MVA), indicating that the market valuation of the entity remained above the total invested capital throughout the period.
- Market Value Trends
- The market value exhibited significant volatility over the five-year period. After an initial increase from 82,168 million USD in 2013 to 96,140 million USD in 2014, a contraction occurred in 2015, with the value falling to 79,713 million USD. A subsequent recovery led to a peak valuation of 102,727 million USD in 2016, followed by a slight decrease to 99,884 million USD by the end of 2017.
- Invested Capital Stability
- Invested capital remained relatively stable compared to the fluctuations in market value. A marginal decrease was observed between 2013 and 2014, moving from 56,262 million USD to 52,455 million USD. From 2015 onward, a gradual upward trend was recorded, with capital increasing steadily to reach 57,150 million USD by December 31, 2017.
- Market Value Added (MVA) Dynamics
- The MVA fluctuated in alignment with the market value, as the stability of the invested capital meant that changes in market perception were the primary drivers of MVA variance. A substantial increase in MVA was noted between 2013 and 2014, rising from 25,906 million USD to 43,686 million USD. A sharp decline followed in 2015 to 26,550 million USD, before reaching its highest point of 47,766 million USD in 2016. The period concluded with an MVA of 42,735 million USD in 2017.
The correlation between the market value and MVA suggests that the company's ability to create value for shareholders was heavily influenced by external market pricing and sentiment rather than structural changes in the capital base.
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MVA Spread Ratio
Time Warner Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 42,735) | 47,766) | 26,550) | 43,686) | 25,906) | |
| Invested capital2 | 57,150) | 54,961) | 53,163) | 52,455) | 56,262) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 74.78% | 86.91% | 49.94% | 83.28% | 46.05% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2017 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 42,735 ÷ 57,150 = 74.78%
4 Click competitor name to see calculations.
The analysis of market value creation from 2013 to 2017 reveals significant volatility in market perception and value generation, contrasted by a relatively stable base of invested capital. The fluctuating nature of the market value added suggests a cyclical response to external market conditions or internal strategic shifts during this five-year period.
- Market Value Added (MVA)
- A non-linear trend is observed in the MVA, which began at 25,906 million US$ in 2013 and experienced a substantial increase to 43,686 million US$ by 2014. A sharp correction occurred in 2015, with the value dropping to 26,550 million US$. However, a strong recovery followed in 2016, reaching a peak of 47,766 million US$, before settling at 42,735 million US$ in 2017.
- Invested Capital
- Invested capital remained remarkably consistent over the analyzed period. After a slight contraction from 56,262 million US$ in 2013 to 52,455 million US$ in 2014, the figure grew steadily each year, ending the period at 57,150 million US$ in 2017. This stability indicates that the fluctuations in MVA were driven by market valuation rather than significant changes in the capital employed.
- MVA Spread Ratio
- The MVA spread ratio exhibited high volatility, directly mirroring the trends seen in the market value added. The ratio rose from 46.05% in 2013 to 83.28% in 2014, fell back to 49.94% in 2015, and reached its maximum of 86.91% in 2016. The period concluded with a ratio of 74.78% in 2017, indicating that the company consistently generated value above its invested capital throughout the period, despite the periodic declines.
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MVA Margin
Time Warner Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 42,735) | 47,766) | 26,550) | 43,686) | 25,906) | |
| Revenues | 31,271) | 29,318) | 28,118) | 27,359) | 29,795) | |
| Add: Increase (decrease) in deferred revenue | 129) | 82) | 74) | 1) | (57) | |
| Adjusted revenues | 31,400) | 29,400) | 28,192) | 27,360) | 29,738) | |
| Performance Ratio | ||||||
| MVA margin2 | 136.10% | 162.47% | 94.17% | 159.67% | 87.11% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 MVA. See details »
2 2017 Calculation
MVA margin = 100 × MVA ÷ Adjusted revenues
= 100 × 42,735 ÷ 31,400 = 136.10%
3 Click competitor name to see calculations.
The financial performance between 2013 and 2017 is characterized by significant fluctuations in market value creation despite relative stability in adjusted revenues. The variance in market value added suggests an inconsistent market valuation of the company's long-term growth potential and capital efficiency over this five-year period.
- Market Value Added (MVA)
- MVA exhibited high volatility, with a sharp increase from US$ 25,906 million in 2013 to US$ 43,686 million in 2014. This was followed by a substantial correction in 2015, where the value dropped to US$ 26,550 million. A recovery phase ensued, leading to a period peak of US$ 47,766 million in 2016, before a slight decline to US$ 42,735 million was recorded by the end of 2017.
- Adjusted Revenues
- Adjusted revenues remained comparatively stable, showing a narrow range of fluctuation. After a minor decrease from US$ 29,738 million in 2013 to US$ 27,360 million in 2014, a consistent upward trend was observed from 2015 through 2017, reaching a maximum of US$ 31,400 million.
- MVA Margin
- The MVA margin closely tracked the movements of the total MVA, reflecting a lack of correlation with revenue growth. The margin rose from 87.11% in 2013 to 159.67% in 2014, contracted to 94.17% in 2015, and peaked at 162.47% in 2016. The period concluded with an MVA margin of 136.10% in 2017, indicating that market value additions significantly outweighed the annual revenue base throughout the analyzed timeframe.
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