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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- Income Statement
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
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MVA
Based on: 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), 10-K (reporting date: 2012-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
- Market (fair) value of RAI
- The market value demonstrated a consistent upward trend over the five-year period. Starting at approximately 29.8 billion US dollars at the end of 2012, it increased marginally to around 31 billion in 2013. This was followed by a significant rise to nearly 42.7 billion in 2014, and then a substantial leap to 87.2 billion in 2015. The growth continued at a slower rate, reaching close to 100.7 billion by the end of 2016. This indicates a strong appreciation in the company's market valuation, particularly sharp between 2014 and 2015.
- Invested capital
- The invested capital remained relatively stable during the initial three years, fluctuating slightly around the 10 billion US dollar mark, with a minor decrease observed in 2014 to approximately 9.7 billion. However, in 2015, there was a dramatic increase to about 45.1 billion, which was maintained at a similar level in 2016, with a slight decrease to roughly 44.9 billion. This suggests a notable capital infusion or acquisition activity in 2015, significantly raising the assets base.
- Market value added (MVA)
- MVA showed robust growth through the period, starting at nearly 19.4 billion US dollars in 2012, followed by a steady increase to about 20.5 billion in 2013 and then a more marked rise to 32.9 billion in 2014. A slower increase to 42.1 billion occurred in 2015, after which it surged to 55.7 billion in 2016. The pattern aligns with the increases seen in market value and invested capital, indicating that shareholder value grew significantly, especially post-2014, as the company generated substantial value above the invested capital.
MVA Spread Ratio
Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Market value added (MVA)1 | ||||||
Invested capital2 | ||||||
Performance Ratio | ||||||
MVA spread ratio3 | ||||||
Benchmarks | ||||||
MVA Spread Ratio, Competitors4 | ||||||
Coca-Cola Co. | ||||||
Mondelēz International Inc. | ||||||
PepsiCo Inc. | ||||||
Philip Morris International Inc. |
Based on: 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), 10-K (reporting date: 2012-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2016 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data reveals several notable trends over the five-year period ending in 2016. A comprehensive review shows significant movements in market value added (MVA), invested capital, and the MVA spread ratio.
- Market Value Added (MVA)
- The market value added exhibits a consistent and substantial upward trajectory from 2012 through 2016. Starting at approximately $19.4 billion in 2012, MVA increased steadily each year, reaching $55.7 billion by the end of 2016. This growth signifies a rising market valuation over the invested capital, suggesting enhanced investor confidence and value creation during the period.
- Invested Capital
- Invested capital remained relatively stable during the initial three years, fluctuating marginally around the $10 billion mark (from $10.4 billion in 2012 to just under $9.7 billion in 2014). However, a significant inflection appears in 2015 when invested capital surged dramatically to over $45 billion, a level that was sustained into 2016. This sharp increase may indicate major capital investments, acquisitions, or changes in the company's capital structure.
- MVA Spread Ratio
- The MVA spread ratio, which compares the market value added relative to invested capital, started at a high level of approximately 187% in 2012, slightly increasing through 2014 to peak at nearly 339%. This suggests a period of highly efficient capital utilization and strong excess market value generation above capital costs. However, following the capital spike in 2015, the ratio contracted sharply to around 93%, before a modest increase to approximately 124% in 2016. The reduction corresponds with the substantial increase in invested capital, implying that although value creation continued, it did so at a relatively lower margin compared to prior years.
In summary, the period reflects a strong trend of value creation as indicated by rising MVA, underpinned initially by stable invested capital and highly efficient capital usage. The marked expansion in invested capital from 2015 suggests a strategic shift or significant deployment of resources, which correspondingly moderated the MVA spread ratio in relative terms. Nonetheless, the maintained growth in MVA alongside increased capital supports the view of ongoing positive investor valuation and value generation.
MVA Margin
Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Market value added (MVA)1 | ||||||
Net sales, includes excise taxes | ||||||
Add: Increase (decrease) in deferred revenue, related party | ||||||
Adjusted net sales, includes excise taxes | ||||||
Performance Ratio | ||||||
MVA margin2 | ||||||
Benchmarks | ||||||
MVA Margin, Competitors3 | ||||||
Coca-Cola Co. | ||||||
Mondelēz International Inc. | ||||||
PepsiCo Inc. | ||||||
Philip Morris International Inc. |
Based on: 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), 10-K (reporting date: 2012-12-31).
1 MVA. See details »
2 2016 Calculation
MVA margin = 100 × MVA ÷ Adjusted net sales, includes excise taxes
= 100 × ÷ =
3 Click competitor name to see calculations.
The analysis of the annual financial data reveals several notable trends over the five-year period from 2012 to 2016. The company demonstrates consistent growth across key financial metrics, indicating an improving financial position and increased market value.
- Market Value Added (MVA)
- The MVA shows a significant upward trajectory, increasing steadily from approximately $19.4 billion in 2012 to nearly $55.7 billion by 2016. This growth reflects a strengthening market perception of the company's value and its ability to generate returns above the cost of capital. The progression suggests successful strategic initiatives and improved market confidence over the period.
- Adjusted Net Sales (Including Excise Taxes)
- Adjusted net sales display a positive trend with an initial slight decline from $12.2 billion in 2012 to $12.0 billion in 2013, followed by a gradual increase to $16.9 billion in 2016. This recovery and subsequent growth indicate an expansion in revenue-generating activities and potentially increased demand for the company's products or services. The growth particularly from 2014 to 2016 is notable, signaling strong operational performance in those years.
- MVA Margin
- The MVA margin exhibits significant improvement from 158.6% in 2012 to 329.11% in 2016, more than doubling during the period. This metric suggests enhanced efficiency and profitability relative to net sales, with the company generating substantially more market value for each dollar of sales. The increasing margin underscores effective value creation and growing investor confidence in the company's financial and operational capabilities.
Overall, the trends signal robust growth in both market value and sales volume, accompanied by increasing profitability and value creation. These patterns imply successful execution of business strategies and strong financial health during the years analyzed.