Financial Glossary
Enterprise Value (EV)
The total value of a company including debt and excluding cash.
What Is Enterprise Value (EV)?
Enterprise value represents what it would cost to buy an entire company — its market cap plus its debt, minus the cash on its balance sheet. It's the theoretical takeover price and gives a more complete picture than market cap alone.
Formula
EV = Market Cap + Total Debt - Cash & EquivalentsWhy It Matters
Two companies can have the same market cap but very different enterprise values if one carries heavy debt. EV-based ratios like EV/EBITDA are more useful for comparing companies with different capital structures.
Related Terms
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