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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MVA
EMC Corp., 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 »
- Market (fair) value of EMC
- The market value exhibits fluctuations over the five-year period. It decreases from $56,502 million at the end of 2011 to $47,472 million in 2012. Subsequently, it recovers to $52,262 million in 2013 and further increases to a peak of $58,100 million in 2014. However, this upward trend reverses in 2015, with the market value declining to $51,918 million. Overall, the market value shows volatility with a peak in 2014 followed by a reduction in the final year observed.
- Invested capital
- This metric shows a consistent upward trend throughout the period. Beginning at $24,594 million in 2011, invested capital rises steadily each year to reach $33,788 million by the end of 2015. The growth appears gradual and continuous, reflecting ongoing investments or capital improvements by the entity.
- Market value added (MVA)
- The MVA exhibits a declining trend from $31,908 million in 2011 down to $20,079 million in 2012, indicating a significant decrease in market value relative to invested capital. It stabilizes somewhat in 2013 at $20,822 million but increases in 2014 to $25,832 million. Despite this mid-period recovery, MVA dramatically declines again in 2015 to $18,130 million, its lowest point in the given timeframe. This suggests challenges in generating market value beyond the invested capital, particularly in the initial and final years.
- Summary of trends and insights
- Over the five years, invested capital steadily rises, suggesting consistent investment activity. Conversely, market value fluctuations reflect external market conditions or company performance variability, with a notable high in 2014. The MVA trend indicates that despite increased capital investment, the company experienced difficulty in enhancing market value relative to the capital invested, especially apparent in the declines observed in 2012 and 2015. This pattern highlights potential concerns about value creation efficiency or market perceptions in those years.
MVA Spread Ratio
EMC Corp., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| MVA spread ratio3 | ||||||
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
The analysis of the financial data over the five-year period reveals several notable trends and shifts in the company’s value creation and capital deployment.
- Market Value Added (MVA)
- The market value added experienced a significant decline from 31,908 million US dollars at the end of 2011 to 18,130 million US dollars by the end of 2015. Although there was a slight recovery in 2014 with an increase to 25,832 million, the overall trend across the five years is downward. This suggests a reduction in the company's market value in excess of its invested capital over time.
- Invested Capital
- Invested capital showed a consistent upward trend, growing from 24,594 million US dollars in 2011 to 33,788 million US dollars in 2015. This steady increase indicates that the company has been continuously increasing the amount of capital employed in its operations during the period under review.
- MVA Spread Ratio
- The MVA spread ratio, which reflects the percentage return spread between market value added and invested capital, displayed a marked decline over the five years. Starting at a high level of 129.74% in 2011, it fell sharply to 53.66% by 2015. This decrease reflects diminishing returns on the capital invested and a reduction in the company's ability to generate value above its cost of capital.
Overall, the combination of decreasing market value added and increasing invested capital, alongside a declining MVA spread ratio, signals a weakening in value creation efficiency for the company during the period observed. This may suggest challenges in maintaining competitive profitability or market perceptions of the firm’s future growth potential.
MVA Margin
EMC Corp., 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 | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenues | ||||||
| Performance Ratio | ||||||
| MVA margin2 | ||||||
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
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 revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
Analysis of the annual financial data reveals several key trends over the five-year period.
- Market Value Added (MVA)
- The MVA exhibited notable fluctuations throughout the years. Beginning at 31,908 million US dollars in 2011, it declined significantly in 2012 to 20,079 million. A slight recovery was observed in 2013 with an increase to 20,822 million, followed by a more substantial rise in 2014 reaching 25,832 million. However, the upward trend reversed in 2015, where MVA dropped sharply to 18,130 million, the lowest level in the analyzed period after 2012.
- Adjusted Revenues
- Adjusted revenues demonstrated a generally positive trend with steady growth from 21,518 million in 2011 to a peak of 25,626 million in 2014. The following year, 2015, showed a slight decline to 25,341 million. Despite the minor decrease in 2015, overall revenue levels remained relatively stable and consistently higher compared to 2011.
- MVA Margin
- The MVA margin, expressed as a percentage, followed a declining pattern over the observed timeframe. Starting at a high of 148.29% in 2011, the margin dropped markedly to 86.96% in 2012 and further decreased to 84.47% in 2013. A partial recovery occurred in 2014, with the margin increasing to 100.8%, yet it declined again in 2015 to 71.54%, the lowest margin in the five years. This indicates that the company’s market value added relative to revenues weakened notably after 2011.
In summary, while adjusted revenues showed resilience and growth nearly every year except a slight dip in 2015, both MVA and MVA margin experienced significant volatility and generally declining trends. The sharp decreases in MVA and MVA margin in 2012 and 2015 suggest challenges in generating value for shareholders relative to revenue during those years, impacting overall market performance perception despite steady revenue figures.