Shareholder Value Added - SVA

AAA

DEFINITION of 'Shareholder Value Added - SVA'

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)

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Cost Of Capital

    The required return necessary to make a capital budgeting project, ...
  2. Shareholder

    Any person, company or other institution that owns at least one ...
  3. Weighted Average Cost Of Capital ...

    A calculation of a firm's cost of capital in which each category ...
  4. Economic Value Added - EVA

    A measure of a company's financial performance based on the residual ...
  5. Market Value Added - MVA

    A calculation that shows the difference between the market value ...
  6. Net Operating Profit After Tax ...

    A company's potential cash earnings if its capitalization were ...
Related Articles
  1. Why Do Companies Care About Their Stock ...
    Investing Basics

    Why Do Companies Care About Their Stock ...

  2. Knowing Your Rights As A Shareholder
    Investing Basics

    Knowing Your Rights As A Shareholder

  3. Who is responsible for protecting and ...
    Investing

    Who is responsible for protecting and ...

  4. A Clear Look At EBITDA
    Markets

    A Clear Look At EBITDA

comments powered by Disqus
Hot Definitions
  1. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  2. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
Trading Center