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MVA VCQ

This topic has 3 replies, 2 voices, and was last updated 12 years ago by John Moffat.

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November 22, 2012 at 2:32 am #55607
dazhong0703
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What is value creation quotient (VCQ), and what’s the relationship between VCQ and market value added (MVA)?
Thank you,
November 22, 2012 at 5:56 pm #108346
John Moffat
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Its the market value of equity and the balance sheet value of debt divided by the total capital raised (and retained). So the ratio goes up the more the market value of equity increases.
However it is not in the syllabus for P4.
November 27, 2012 at 12:54 am #108347
dazhong0703
Member
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I see from OpenTuition revision notes as blow. My queries are:
1) does MVA include Ve and Vd, or only Ve? , and
2) does MVA include SVA (shareholder value added)?
Thank you
Market Value Added
MVA is the value added to a business since it was formed, over and above the money invested in the company by shareholders and long term debt holders.
Example
BB Plc
2003 Ve = $25m
2004 Ve = $40m
Rights issue in 2004 = $5m
MVA = $40m – $25m – $5m = $10m
November 27, 2012 at 4:56 pm #108349
John Moffat
Keymaster
- Topics: 57
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Actually I must remove SVA because it is no longer in the syllabus.
However, MVA includes both Ve and Vd – it is looking at the total market value of the business.
Effectively it does include SVA.
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