Enterprise Value Calculation
A company has a market capitalization of $50M, debt of $10M, and cash of $5M, resulting in an EV of $55M.
- Debt:
- 10000000
- EV:
- 55000000
- Cash:
- 5000000
- MarketCap:
- 50000000
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Valuation★ Essential⚗ Includes simulator
Enterprise Value
Total value of a company, including debt and equity.
Deep dive
Enterprise Value (EV) is a measure of a company's total value, including its debt and equity. It is used to assess the cost of acquiring a company. A limitation of EV is that it can be influenced by changes in capital structure. Unlike Equity Value, EV includes debt in its calculation.
Key formula
EV = Market Capitalization + Debt - Cash
Real-world examples
Pitfalls to avoid
- Forgetting to include cash
- Confusing EV with market capitalization
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