Series 79: Enterprise Value (EV)

a more comprehensive representation of value than equity value, because EV includes a company’s cash, debt, and preferred stock, in addition to equity value. It is often referred to as the “takeover value” of a company. Since an acquirer of a company buys that company’s cash and debt, EV is a more realistic measure of market value. EV can be calculated by adding equity value, the market value of preferred shares, net debt, and any non-controlling interests.