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.
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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.
Rank-ready answer
Definition, example, and interview framing
EV represents the total value of a company's operating business, independent of capital structure: Market Cap + Debt - Cash + Minority Interest + Preferred Stock.
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.
In an interview, define Enterprise Value (EV), explain where it appears in a real finance workflow, then name one assumption or limitation that a reviewer should check.
FAQ
Frequently Asked Questions
What is 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.
How is Enterprise Value (EV) used in finance?
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.
Can you give an example of Enterprise Value (EV)?
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
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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.