🏢💰 Enterprise Value (EV) is one of the most important metrics in corporate finance. It tells you the total value of a company — not just what shareholders own, but also what a buyer would need to pay to acquire the entire business.
In this article, we’ll explain how to calculate enterprise value, what it includes, and provide a calculator to help you estimate it quickly.
🙋♀️ What Is Enterprise Value?
Enterprise Value represents the full value of a business, including its equity, debt, and cash. It shows how much it would cost to purchase the entire company, including debt obligations and cash reserves.
It’s widely used in:
- Mergers and acquisitions
- Valuation modeling
- Ratio analysis like EV/EBITDA and EV/Sales
Use the calculator below to instantly estimate enterprise value based on market cap, debt, and cash.
🧮 Enterprise Value Formula
The basic formula for Enterprise Value is:
EV = Market Capitalization + Total Debt – Cash and Cash EquivalentsWhere:
- Market Capitalization = Share Price × Total Shares Outstanding
- Total Debt = Short-term + Long-term debt
- Cash and Equivalents = All liquid assets
💵 Example Calculation
Let’s say a company has:
- 10 million shares outstanding
- Share price = $40
- Total debt = $200 million
- Cash on hand = $50 million
Step 1: Market Cap = 10M × $40 = $400 million
Step 2: EV = $400M + $200M – $50M = $550 million
That’s the true cost to acquire the business.
⚖️ Why Enterprise Value Matters
Unlike equity value, which only shows the value for shareholders, EV provides a complete picture by including debt and subtracting cash.
It helps you:
- Compare companies with different capital structures
- Calculate more accurate valuation multiples
- Understand the actual “takeover price” of a company
🔁 Related Posts
- Equity Value Calculator