a company's expected return on invested capital is less than its cost of equity, then the company must also have a negative market value added (MVA).

Question

Quizplus · Accepted Answer

A company's market value added (MVA) is determined by the difference between the market value of the company and the capital invested by shareholders. While a lower return on invested capital compared to the cost of equity can negatively impact MVA, other factors such as market conditions and investor expectations can still result in a positive MVA.

A Company's Expected Return on Invested Capital Is Less Than