Enterprise Value (EV)
EV represents the total value of a company's operating business, independent of capital structure: Market Cap + Debt - Cash + Minority Interest + Preferred Stock.
Concept map
Learn, apply, review
Definition
EV represents the total value of a company's operating business, independent of capital structure: Market Cap + Debt - Cash + Minority Interest + Preferred Stock.
Use case
Used in corporate finance workflows, analysis, and technical interviews.
Judgment check
Useful only when the assumptions and inputs behind the metric are understood.
⚡ Enterprise Value Calculator
Calculate the total value to acquire a company including debt and cash.
Deep dive
How to think about Enterprise Value (EV)
EV is the theoretical takeover price — what an acquirer pays for the business, assuming they inherit debt but get the cash. It enables comparison of companies with different leverage. EV multiples (EV/EBITDA, EV/Sales) are standard in M&A and investment banking.
Example: Company X: Market cap $5B, Debt $2B, Cash $500M, Preferred $0, Minority interest $200M. EV = $5B + $2B - $0.5B + $0.2M = $6.7B. This is the true economic value of the business operations.
AI Insight
Powered by FinLyne Intelligence Engine
Enterprise Value provides the complete picture of acquisition cost. While Market Cap only reflects equity value, EV includes debt obligations and subtracts cash that the acquirer receives.
This metric is essential for comparing companies with different capital structures and is the standard for M&A valuation globally.