Enterprise Value
Definition
The total value of a company: market capitalization + total debt − cash and cash equivalents. Used in valuation multiples like EV/EBITDA.
Why is Enterprise Value Important?
Enterprise Value is a critical concept in corporate finance, business analysis, and investment decision-making. Whether you are evaluating a company's performance, assessing an investment opportunity, or running your own business, understanding this metric helps you make data-driven decisions that maximize returns and minimize risk.
Our business calculators provide instant computations for this metric, empowering entrepreneurs, analysts, and investors to evaluate financial health and make strategic decisions with confidence.
What is Enterprise Value?
Enterprise Value (EV) represents the total value of a business — what it would cost to acquire the entire company. It includes the value of equity AND debt, minus cash. EV is the most comprehensive measure of a company's true worth.
Enterprise Value Formula
EV = Market Cap + Total Debt − Cash & Cash Equivalents
EV vs Market Cap
| Metric | What It Includes | Analogy |
|---|---|---|
| Market Cap | Share price × shares outstanding | Equity value (your ownership stake) |
| Enterprise Value | Market Cap + debt − cash | Total price to buy the whole house (including mortgage) |
Example
| Item | Value |
|---|---|
| Share price | $50 |
| Shares outstanding | 10 million |
| Market cap | $500 million |
| Total debt | $200 million |
| Cash | $50 million |
| Enterprise Value | $650 million |