Enterprise Value
Definition
The total value of a company's operations: market capitalization plus net debt, minority interests, and preferred equity.
Explanation
Enterprise value (EV) represents the total price an acquirer would pay for a company. Unlike market cap, EV accounts for the debt the acquirer would assume and the cash they would receive. EV = Market Cap + Total Debt - Cash and Equivalents. EV-based multiples (EV/EBITDA, EV/Revenue, EV/FCF) are preferred over price-based multiples (P/E) because they're capital-structure neutral — allowing fair comparisons between companies with different leverage levels.
Formula
EV = Market Cap + Total Debt + Preferred Stock + Minority Interest - Cash
How Stoquity Uses This
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