Enterprise Value

Definition

Enterprise value is the overall value of a company. It factors a company's market cap, total debt, and available cash.

Calculations

Enterprise Value = Market Cap + Total Debt - Cash

Why is this important?

Enterprise value is a more accurate representation of the overall value of a company. The reason for this is, if a company were to be purchased outright, the buyer would need to account for both the market cap value and the debt of the company being purchased/taken-over.

Financial Glossary Reference

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