Glossary
Definition
Enterprise Value
A measure of a company's total value, including debt and excluding cash.
Enterprise value (EV) is calculated as market cap plus total debt minus cash and cash equivalents. It represents the theoretical acquisition price of a company if a buyer were to purchase all its shares and pay off all its debts. EV is commonly used in acquisition analysis and when comparing companies with different capital structures.
Frequently Asked Questions
Why is enterprise value different from market cap?
Market cap only reflects the equity value. Enterprise value includes debt (which an acquirer must assume) and subtracts cash (which offsets the cost). A company with a lot of debt has a higher EV than market cap.