A measure of value that uses the notion of market value: it compares an entity’s current market value with the amount provided by its current owners. By nature, it helps an entity’s management to focus on a broad measure of value to owners, i.e., rewards to stockholders, rather than the accounting profit.

It is the market value of invested capital minus the book value of that capital:

Market value added = (market value of equity + market value of debt) – (book value of debt + book value of equity)

This measure is similar to the market-to-book ratio (MTB) as both use total market value and total invested capital as main components.

Under normal circumstances, the market value added is positive when an entity’s economic value added is consistently high, and it would be negative if economic value added is consistently negative.