Shareholder Value Added - SVA

What is 'Shareholder Value Added - SVA'

Shareholder value added (SVA) is a value-based performance measure of a company's worth to shareholders. The basic calculation is net operating profit after tax (NOPAT) minus the cost of capital from the issuance of debt and equity, based on the company's weighted average cost of capital:

Shareholder Value Added (SVA)

BREAKING DOWN 'Shareholder Value Added - SVA'

Using the market value of the company, rather than the accounting-based value in the above calculation, will give the market value added to shareholders.

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RELATED FAQS
  1. What is Shareholder Value Added (SVA) and how is it used in value investing?

    Read about shareholder value added (SVA), a corporate profitability metric, and why value investors disagree about its usefulness. Read Answer >>
  2. How can I use Net Operating Profit After Tax (NOPAT) to compare companies and make ...

    Learn what net operating profit after tax (NOPAT) measures. Understand how an investor can use NOPAT after tax to compare ... Read Answer >>
  3. Why is it useful for investors to calculate Net Operating Profit After Tax for over-leveraged ...

    Understand why it is useful for investors to calculate net operating profit after tax (NOPAT) for overleveraged companies ... Read Answer >>
  4. Why is it beneficial to use Net Operating Profit After Tax to compare companies within ...

    Understand why it's beneficial to use net operating profit after tax (NOPAT) to compare companies within the same industry ... Read Answer >>
  5. How does Net Operating Profit After Tax give a clearer view of the operating efficiency ...

    Understand how net operating profit after tax gives a clearer view of the operating efficiency of a company in relation to ... Read Answer >>
  6. Why is it beneficial to use Net Operating Profit After Tax as opposed to net income ...

    Understand why it is beneficial to use net operating profit after tax as opposed to net income when making an investment ... Read Answer >>
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