When decisions are made and investments are made in a company, it is presumed that the decisions and investments are made with the goal of increasing the value of the company. Market Value Added (MVA) provides a measure for evaluating whether or not the decisions and investments made have been successful in increasing the company's value. Companies use MVA to understand if their strategies are working in terms of increasing shareholder value.

MVA is calculated by subtracting a company’s total invested capital from the current market value of the company. This resultant figure can then be compared to competitors’ figures to assess any competitive advantages, allowing investors and management to gain greater insight into the performance of the company. A positive number resulting from a MVA calculation is a good indication that the company has exceeded the investments made by shareholders by creating more value. On the other hand, if the MVA is negative, it indicates that the management’s decisions and investments have not been successful in increasing the company’s market value.

It is important to note that MVA should not be considered a reliable indication of management performance during volatile market conditions, such as strong bull markets, when stock prices rise in general. In these conditions, it is possible the company’s market value is increased regardless of the management’s decisions and investments. Similarly, it is possible for a company to increase its value, even if the MVA is negative, providing the market values are consistently increasing.

Overall, MVA is a useful tool for investors and company managers to compare the company’s current market value with the amount of capital invested in the company. It provides insight into the success of the management’s decisions and investments helping to inform future strategies for the company. However, it should not be relied upon as an absolute indicator of performance during strong bull markets.