What is enterprise value? and how is it relevant, especially for a value investor?
2006-07-30 11:19:55 · 2 answers · asked by TK 1 in Business & Finance ➔ Investing
Enterprise value is is the value of a company as if you were purchasing all its assets (whether through debt or equity financing). the valuation incorporates the market capitalization, debt, and cash. Hence, the formula would be:
Market Cap + Total Debt + equity of minorities + preferred shares - cash
or you can simplify it as: Market Cap + Net Debt
Net debt is incorporated since the acquirer assumes all the debt and cash of the target company.
2006-07-30 13:55:08 · answer #1 · answered by J 4 · 0⤊ 0⤋
Enterprise Value (EV) is known as total company value. The calculation... EV= mkt value of common+ mkt value of preferred+ mkt value of debt+ minority interest- cash and investments. EV could also be thought of as the market value of invested capital. It is roughly the price one would have to pay to purchase the company.
2006-07-30 11:52:21 · answer #2 · answered by The Time 2 · 0⤊ 0⤋